For the quarterly period ended June 30, 2003

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B84q37YCTgW/Jm6au46FUrmEZzQwlfAF0oovPI/WWVaGimlBLyNL2CXL1reaTUMx lCoog8Vh8+CdYhdJDFIrLg== 0001193125-03-049203.txt : 20030915 0001193125-03-049203.hdr.sgml : 20030915 20030915063253 ACCESSION NUMBER: 0001193125-03-049203 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISHER COMMUNICATIONS INC CENTRAL INDEX KEY: 0001034669 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 910222175 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22439 FILM NUMBER: 03894770 BUSINESS ADDRESS: STREET 1: 100 FOURTH AVENUE NORTH STREET 2: SUITE 440 CITY: SEATTLE STATE: WA ZIP: 98109-4932 BUSINESS PHONE: 2064047000 MAIL ADDRESS: STREET 1: 100 FOURTH AVENUE NORTH STREET 2: SUITE 440 CITY: SEATTLE STATE: WA ZIP: 98109-4932 FORMER COMPANY: FORMER CONFORMED NAME: FISHER COMPANIES INC DATE OF NAME CHANGE: 19970226 10-Q 1 d10q.htm FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 For the quarterly period ended June 30, 2003

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2003

Transition Report Under Section 13 or 15(d) of the Exchange Act

For the transition period from to

Commission File Number 0-22439

FISHER COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

WASHINGTON

91-0222175

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

100 Fourth Ave. N

Suite 440

Seattle, Washington 98109

(Address of Principal Executive Offices) (Zip Code)

(206) 404-7000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $1.25 par value, outstanding as of June 30, 2003: 8,595,288

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

The following Condensed Consolidated Financial Statements (unaudited) are presented for the Registrant, Fisher Communications, Inc., and its subsidiaries.

Condensed Consolidated Statement of Operations: Three and six months ended June 30, 2003 and 2002.

Condensed Consolidated Balance Sheet: June 30, 2003 and December 31, 2002.

Condensed Consolidated Statement of Cash Flows: Six months ended June 30, 2003 and 2002.

Condensed Consolidated Statement of Comprehensive Income: Three and six months ended June 30, 2003 and 2002.

Notes to Condensed Consolidated Financial Statements.

ITEM 1 – FINANCIAL STATEMENTS

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
				Restated
(in thousands, except per share amounts)
(Unaudited)
Revenue	$	71,152		$	64,627		$	39,039		$	34,672
Costs and expenses
Cost of services sold (exclusive of depreciation reported separately below, amounting to $8,317, $7,622, $4,073, and $3,813, respectively)		35,818			30,268			20,246			14,881
Selling expenses		12,166			8,823			6,137			4,938
General and administrative expenses		21,963			18,137			11,162			9,353
Depreciation		9,194			8,726			4,500			4,344

		79,141			65,954			42,045			33,516

Income (loss) from operations		(7,989	)		(1,327	)		(3,006	)		1,156
Net gain on derivative instruments		411			6,103			653			6,828
Loss from extinguishment of long-term debt					(3,264	)
Other income, net		5,601			1,374			800			788
Equity in operations of equity investees		2			32			(2	)		33
Interest expense		(10,149	)		(9,528	)		(4,613	)		(4,962	)

Income (loss) from continuing operations before income taxes		(12,124	)		(6,610	)		(6,168	)		3,843
Provision for federal and state income taxes (benefit)		(4,729	)		(3,041	)		(2,445	)		397

Income (loss) from continuing operations		(7,395	)		(3,569	)		(3,723	)		3,446
Income (loss) from discontinued operations, net of income tax:
Real estate operations sold					4						(8	)
Georgia television stations held for sale		884			670			583			406
Portland radio stations held for sale		(18	)		326			12			346
Media Services operations closed		(1,381	)		(1,669	)		(1,159	)		(670	)

Income (loss) before cumulative effect of change in accounting principle		(7,910	)		(4,238	)		(4,287	)		3,520
Cumulative effect of change in accounting principle, net of income tax benefit of $34,662					(64,373	)

Net income (loss)	$	(7,910	)	$	(68,611	)	$	(4,287	)	$	3,520

Income (loss) per share:
From continuing operations	$	(0.86	)	$	(0.41	)	$	(0.43	)	$	0.40
From discontinued operations		(0.06	)		(0.08	)		(0.07	)		0.01
Cumulative effect of change in accounting principle					(7.50	)

Net income (loss) per share	$	(0.92	)	$	(7.99	)	$	(0.50	)	$	0.41

Income (loss) per share assuming dilution:
From continuing operations	$	(0.86	)	$	(0.41	)	$	(0.43	)	$	0.40
From discontinued operations		(0.06	)		(0.08	)		(0.07	)		0.01
Cumulative effect of change in accounting principle					(7.50	)

Net income (loss) per share assuming dilution	$	(0.92	)	$	(7.99	)	$	(0.50	)	$	0.41

Weighted average shares outstanding		8,594			8,592			8,595			8,593
Weighted average shares outstanding assuming dilution		8,594			8,592			8,595			8,613

See accompanying notes to condensed consolidated financial statements.

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

	June 30 2003			December 31 2002
				Restated
(in thousands, except share and per share amounts)
(Unaudited)
ASSETS
Current Assets
Cash and short-term cash investments	$	9,854		$	23,515
Restricted cash					12,778
Receivables		29,062			30,943
Prepaid income taxes					4,425
Prepaid expenses		7,523			6,200
Television and radio broadcast rights		6,816			7,884
Assets held for sale		2,503			2,161

Total current assets		55,758			87,906

Marketable Securities, at market value		105,954			107,352

Other Assets
Cash value of life insurance and retirement deposits		13,965			13,876
Television and radio broadcast rights		4,582			5,253
Goodwill, net		38,354			38,354
Intangible assets		1,232			765
Investments in equity investees		2,925			2,922
Other		11,957			17,206
Assets held for sale		62,039			62,457

		135,054			140,833

Property, Plant and Equipment, net		205,970			209,900

	$	502,736		$	545,991

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Notes payable	$	8,274		$	6,448
Trade accounts payable		3,659			4,851
Accrued payroll and related benefits		9,653			6,719
Television and radio broadcast rights payable		5,191			6,179
Other current liabilities		1,328			2,041
Liabilities held for sale		1,187			1,236

Total current liabilities		29,292			27,474

Long-term Debt, net of current maturities		258,848			286,159

Other Liabilities
Accrued retirement benefits		17,361			19,093
Deferred income taxes		27,177			33,116
Television and radio broadcast rights payable, long-term portion		142			111
Other liabilities		5,086			6,563
Liabilities held for sale		398			740

		50,164			59,623

Commitments and Contingencies
Stockholders’ Equity
Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,595,288 in 2003 and 8,594,060 in 2002		10,744			10,743
Capital in excess of par		3,490			3,488
Deferred compensation		(5	)		(11	)
Accumulated other comprehensive income—net of income taxes:
Unrealized gain on marketable securities		68,208			69,020
Minimum pension liability		(1,773	)		(2,183	)
Retained earnings		83,768			91,678

		164,432			172,735

	$	502,736		$	545,991

See accompanying notes to condensed consolidated financial statements.

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Six months ended June 30
	2003			2002
				Restated
(in thousands)
(Unaudited)
Cash flows from operating activities
Net loss	$	(7,910	)	$	(68,611	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation		9,452			9,944
Noncurrent deferred income taxes		(5,502	)		(22,626	)
Cumulative effect of change in accounting principle					99,035
Equity in operations of equity investees		(2	)		(32	)
Gain on sale of marketable securities		(3,675	)
Gain on collection of installment note receivable		(362	)
Amortization of deferred loan costs		569
Increase in fair value of derivative instruments		(411	)		(8,739	)
Loss from extinguishment of debt					3,264
Amortization of television and radio broadcast rights		10,156			7,857
Payments for television and radio broadcast rights		(10,047	)		(13,657	)
Other		288			(833	)
Change in operating assets and liabilities
Receivables		2,046			4,269
Prepaid income taxes		4,424			3,210
Prepaid expenses		(1,276	)		(1,821	)
Cash value of life insurance and retirement deposits		(89	)		(301	)
Other assets		1,377			636
Trade accounts payable, accrued payroll and related benefits and other current liabilities		1,029			(709	)
Accrued retirement benefits		(1,732	)		(93	)
Other liabilities		1,833			3,788

Net cash provided by operating activities		168			14,581

Cash flows from investing activities
Proceeds from sale of real estate and property, plant and equipment		141			376
Proceeds from sale of marketable securities		5,169
Proceeds from collection of installment note receivable		3,185
Restricted cash		12,778
Purchase of radio station license		(467	)
Purchase of property, plant and equipment		(5,794	)		(21,562	)

Net cash provided by (used in) investing activities		15,012			(21,186	)

Cash flows from financing activities
Net payments under notes payable		(122	)		(8,259	)
Borrowings under borrowing agreements and mortgage loans					255,131
Payments on borrowing agreements and mortgage loans		(28,258	)		(222,461	)
Payment of deferred loan costs		(465	)		(5,053	)
Proceeds from exercise of stock options		4			21
Cash dividends paid					(4,468	)

Net cash provided by (used in) financing activities		(28,841	)		14,911

Net increase (decrease) in cash and short-term cash investments		(13,661	)		8,306
Cash and short-term cash investments, beginning of period		23,515			3,568

Cash and short-term cash investments, end of period	$	9,854		$	11,874

See accompanying notes to condensed consolidated financial statements.

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
				Restated
(in thousands)
(Unaudited)
Net income (loss)	$	(7,910	)	$	(68,611	)	$	(4,287	)	$	3,520
Other comprehensive income (loss):
Unrealized gain on marketable securities		1,865			(134	)		961			(3,388	)
Effect of income taxes		(653	)		47			(336	)		1,186
Net gain on interest rate swap					835
Effect of income taxes					(292	)
Loss on settlement of interest rate swap reclassified to operations					2,636
Effect of income taxes					(923	)
Unrealized gain on marketable securities reclassified to operations		(3,114	)
Effect of income taxes		1,090
Adjustment to minimum pension liability,		630
Effect of income taxes		(220	)

Comprehensive income (loss)	$	(8,312	)	$	(66,442	)	$	(3,662	)	$	1,318

See accompanying notes to condensed consolidated financial statements.

FISHER COMMUNICATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments which are necessary to state fairly the consolidated financial position, results of operations, and cash flows of Fisher Communications, Inc. and subsidiaries (the “Company”) as of and for the periods indicated. Fisher Communications, Inc.’s principal wholly-owned subsidiaries include Fisher Broadcasting Company, Fisher Media Services Company, and Fisher Properties Inc. The Company presumes that users of the interim financial information herein have read or have access to the Company’s audited consolidated financial statements and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies or recent subsequent events, may be determined in that context. Accordingly, footnote and other disclosures which would substantially duplicate the disclosures contained in Form 10-K for the year ended December 31, 2002 filed by the Company have been omitted. The financial information herein is not necessarily representative of a full year’s operations.

2. Restatement

Goodwill Impairment—Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (FAS 142). FAS 142 requires the Company to test goodwill and intangible assets for impairment upon adoption and to test goodwill at least annually, or whenever events indicate that an impairment may exist. Upon the adoption of FAS 142, the Company, with the concurrence of its independent auditors, concluded there was no impairment of goodwill. Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2002, the Company and the independent auditors determined that in performing the Company’s initial impairment test, the level (reporting unit) at which the Company should assess goodwill for impairment had been incorrectly identified. The Company has determined that the impairment test should have been conducted at the operating segment level, which consists and requires separate assessment, with respect to the broadcast operations, of each of the Company’s ten television and radio station groups. As a result of the reassessment of the reporting unit, the Company reperformed the first step of the transitional impairment test, which indicated that impairment existed. Completion of the second step of the transitional impairment test resulted in a pre-tax goodwill impairment charge of $99,035,000 related to five television reporting units and a related tax benefit of $34,662,000 (as the aforementioned goodwill was deductible for tax purposes). The required annual impairment test was also reperformed based on the new determination of reporting units, resulting in no further impairment.

As required by the transition provisions of FAS 142, the net loss of $64,373,000 resulting from the reperformed transitional test is recorded as the cumulative effect of a change in accounting principle in the accompanying condensed consolidated financial statements for the six months ended June 30, 2002. This restatement has no effect on the Company’s previously reported revenues and cash flows; nor does it affect results from operations for the six months ended June 30, 2003.

Retention Bonus—Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2002 and the unaudited condensed consolidated financial statements as of March 31, 2003 and for the three months then ended, the Company concluded that certain obligations for retention bonuses described in Note 10 to these unaudited condensed consolidated financial statements should have been accrued over the service period specified in the related retention agreements. Accordingly, the Company revised its financial statements for the year ended December 31, 2002 to record an obligation of $389,000 and related tax effects in the fourth quarter of 2002. Net loss for the year ended December 31, 2002 was increased by $248,000. The Company also revised its financial statements for the three months ended March 31, 2003 to record an additional liability of $886,000 and related tax effects. Net loss for the quarter ended March 31, 2003 was increased by $564,000. This adjustment does not impact the six months ended June 30, 2002.

Pension Plan—In addition, subsequent to the issuance of the consolidated financial statements as of and for the year ended December 31, 2002 and the unaudited condensed consolidated financial statements as of March 31, 2003 and for the three months then ended, the Company concluded that certain pension-related expenses should have been recorded in the first quarter of 2003 and in prior periods.

The Company had a defined-benefit plan for all non-broadcasting employees. Benefit accruals under this plan ceased in July 2001 and plan assets were distributed to participants between 2001 and the first half of 2003. Certain settlement losses relating to the distribution of plan assets should have been recognized in 2002 and in the first quarter of 2003. In addition, the Company determined that additional pension benefits paid in 2003 to certain retired participants who worked beyond their normal retirement age (“Late Retirees”) had not been recognized over periods

in which those employees provided services. Accordingly, the Company revised its financial statements to record the settlement losses and the additional obligation to Late Retirees (cumulatively, the “Pension Adjustments”). The impact of recording the Pension Adjustments also had the effect of reducing Retained Earnings by $433,000 as of December 31, 2002, increasing Accrued Retirement Benefits by $681,000, and reducing Deferred Income Tax Liabilities by $248,000, to reflect the pension liability that should have been recorded as of that date. Pension adjustments to record the additional expense that should have been recognized from January 1, 2000 through December 31, 2002 were recorded in the fourth quarter of 2002 and amounted to $134,000 after taxes. Amounts related to 2000, 2001, and the first three quarters of 2002, totaling $6,000, net of taxes, were not significant in relation to the fourth quarter of 2002 or to the prior periods. The impact of recording the Pension Adjustments for the first quarter of 2003 was an increase in net loss for the quarter by $282,000.

Segment Reporting—As further discussed in Note 9 to the accompanying condensed consolidated financial statements, the Company revised its reportable segments to present the previously reported broadcasting segment as two reportable segments: television and radio. In addition, the previously reported media services segment is presented as the Fisher Plaza segment with the remaining operations in an all other category. The segmental disclosures for comparable periods have been restated to conform to this presentation.

A summary of the significant effects of the restatements on the Company’s condensed consolidated statement of operations for the six months ended June 30, 2002 is as follows (in thousands, except per share amounts):

	Six months ended June 30, 2002
	As originally reported			Adjustments			As restated in Form 10-Q for period ended June 30, 2002
Loss before cumulative effect of change in accounting principle	$	(4,238	)				$	(4,238	)
Cumulative effect of change in accounting principle, net of income tax benefit of $34,662				$	(64,373	)		(64,373	)

Net loss	$	(4,238	)	$	(64,373	)	$	(68,611	)

Loss per share (basic and assuming dilution)
Loss before cumulative effect of change in accounting principle	$	(0.49	)				$	(0.49	)
Cumulative effect of change in accounting principle				$	(7.50	)		(7.50	)

Net loss	$	(0.49	)	$	(7.50	)	$	(7.99	)

A summary of the significant effects of the restatements on the Company’s consolidated balance sheet as of December 31, 2002 is as follows (in thousands):

	December 31, 2002
	As originally reported		Adjustments			As restated in Form 10-K for period ended Dec. 31, 2002
Assets
Goodwill, net	$	189,133	$	(99,035	)	$	90,098
Total assets	$	640,026	$	(99,035	)	$	540,991
Liabilities
Accrued payroll and other benefits	$	6,505	$	389		$	6,894
Accrued retirement benefits	$	18,412	$	681		$	19,093
Deferred income taxes	$	63,167	$	(35,051	)	$	28,116
Stockholders’ equity
Retained earnings	$	156,732	$	(65,054	)	$	91,678
Total stockholders’ equity	$	237,789	$	(65,054	)	$	172,735

In addition to the restatements discussed above, December 31, 2002 balance sheet amounts reported in the accompanying condensed consolidated financial statements have been revised to reclassify the assets and liabilities of the Georgia television stations and the Portland radio stations as Assets and Liabilities held for sale as required by Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”.

3. New Accounting Pronouncements

In May 2002, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 145 “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (FAS 145). FAS 145, which updates, clarifies, and simplifies existing accounting pronouncements, became effective for the Company’s 2003 financial statements. Accordingly, a loss from extinguishment of long-term debt reported by the Company as an extraordinary item in the 2002 financial statements has been reclassified to continuing operations.

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (FAS 148). FAS 148 amends SFAS 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based compensation. It also amends the disclosure provisions of that statement to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. The disclosure provisions of FAS 148 are effective for financial statements issued for fiscal periods beginning after December 15, 2002 and became effective for the Company commencing with the first quarter of the 2003 fiscal year. Disclosures required by FAS 148 are provided in Note 8 to these condensed financial statements. The Company does not currently have plans to change to the fair value method of accounting for its stock-based compensation plans.

On January 1, 2003, the Company adopted FASB Statement No. 143, “Accounting for Asset Retirement Obligations” (FAS 143). This statement requires entities to record the fair value of future liabilities for asset retirement obligations as an increase in the carrying amount of the related long-lived asset if a reasonable estimate of fair value can be made. Over time, the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. The Company has certain legal obligations, principally related to leases on locations used for broadcast system assets, which fall within the scope of FAS 143. These legal obligations include a responsibility to remediate the leased sites on which these assets are located. The Company has concluded that the adoption of FAS 143 does not have a material impact on the Company’s financial statements.

In February 2003, the Company adopted FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46

apply immediately to variable interest entities created after January 31, 2003. Adoption of this portion of the interpretation did not have a material impact on the Company’s financial statements. The consolidation requirements apply to existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The impact of adoption of this portion of the interpretation is not expected to have a material impact on the Company’s financial statements.

4. Discontinued operations

The Company’s real estate subsidiary concluded the sale of one industrial property in October 2002 and three industrial properties in December 2002.

On January 29, 2003, the broadcasting subsidiary signed an asset purchase agreement for the sale of its two Georgia television stations, WFXG-TV, Augusta and WXTX-TV, Columbus, for a purchase price of $40 million plus working capital. Completion of the sale is subject to FCC approval, receipt of consents to assignment of certain material agreements, and satisfaction of other customary closing conditions. The sale is expected to be completed in 2003.

On May 29, 2003, the broadcasting subsidiary signed an asset purchase agreement for the sale of its two Portland, Oregon radio stations, KWJJ-FM AND KOTK-AM, for a purchase price of $44 million. Completion of the sale is subject to FCC approval, receipt of consents to assignment of certain material agreements, and satisfaction of other customary closing conditions. The sale is expected to be completed in 2003.

In connection with the Company’s restructuring, two of the businesses operated by Media Services subsidiary, Fisher Entertainment LLC (“Fisher Entertainment”) and Civia, Inc. (“Civia”), ceased operations during the second quarter, and those businesses were closed.

The real estate properties that were sold in October and December 2002, the Georgia and Portland stations, as well as Fisher Entertainment and Civia, meet the criteria of a “component of an entity” as defined in FASB Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (FAS 144). The operations and cash flow of those components have been or will be eliminated from the ongoing operations of the Company as a result of the disposal and the Company does not have or will not have any significant involvement in the operations of those components after the disposal transaction. Accordingly, in accordance with the provisions of FAS 144, the results of operations of the properties sold through the date of completion of sale are reported as discontinued operations in the condensed consolidation statement of operations for the six and three months ended June 30, 2003. The results of operations of the Portland and Georgia stations as well as the results of operations of Fisher Entertainment and Civia through the date of closing have also been reported as discontinued operations in the accompanying financial statements. The prior year results of operations of the Portland and Georgia stations, Fisher Entertainment and Civia have been reclassified to conform to the 2003 presentation.

The income (loss) from discontinued operations of the real estate sold for the six and three-month periods ended June 30, 2002 is summarized as follows (in thousands):

	Periods ended June 30, 2002
	Six months			Three months
	(Unaudited)
Income (loss) from discontinued operations:
Before income taxes	$	6		$	(13	)
Income tax effect		(2	)		5

	$	4		$	(8	)

Revenue of the real estate sold amounted to $1,914,000 and $956,000 in the six and three-month periods ended June 30, 2002, respectively. Gain on sale of the real estate sold in October and December 2002 amounted to $7,203,000 after income taxes, and was reported in the fourth quarter of 2002.

The income from discontinued operations of the Georgia television stations to be sold is summarized as follows (in thousands):

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
	(Unaudited)
Income from discontinued operations:
Before income taxes	$	1,360		$	1,067		$	896		$	644
Income tax effect		(476	)		(397	)		(313	)		(238	)

	$	884		$	670		$	583		$	406


Revenue of the Georgia stations to be sold amounted to $4,285,000 and $4,051,000 in the six months ended June 30, 2003 and 2002, respectively, and $2,225,000 and $2,183,000 in the three months ended June 30, 2003 and 2002, respectively.

The income (loss) from discontinued operations of the Portland radio stations to be sold is summarized as follows (in thousands):

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
	(Unaudited)
Income (loss) from discontinued operations:
Before income taxes	$	(29	)	$	545		$	18		$	556
Income tax effect		11			(219	)		(6	)		(210	)

	$	(18	)	$	326		$	12		$	346


Revenue of the Portland radio stations amounted to $2,444,000 and $3,254,000 in the six months ended June 30, 2003 and 2002, respectively, and $1,059,000 and $1,782,000 in the three months ended June 30, 2003 and 2002, respectively.

The loss from discontinued operations of the media businesses closed is summarized as follows (in thousands):

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
	(Unaudited)
Loss from discontinued operations:
Before income taxes	$	(1,930	)	$	(1,752	)	$	(1,609	)	$	(750	)
Income tax effect		549			83			450			80

	$	(1,381	)	$	(1,669	)	$	(1,159	)	$	(670	)

Revenue of the media businesses sold amounted to $1,556,000 and $680,000 in the six months ended June 30, 2003 and 2002, respectively, and $260,000 and $252,000 in the three months ended June 30, 2003 and 2002, respectively.

5. Derivative instruments

The Company is a party to a variable forward sales transaction (“Forward Transaction”) with a financial institution. The Company’s obligations under the Forward Transaction are collateralized by 3,000,000 shares of SAFECO Corporation common stock owned by the Company. A portion of the Forward Transaction is considered a derivative and, as such, the Company periodically measures its fair value and recognizes the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. The Company may in the future designate the Forward Transaction as a hedge and, accordingly, the change in fair value will be recorded in the income statement or in other comprehensive income depending on its effectiveness. The Company may borrow up to $70,000,000 under the Forward Transaction. The Forward Transaction will mature in five separate six-month intervals beginning March 15, 2005 through March 15, 2007. The amount due at each maturity date will be

determined based on the market value of SAFECO common stock on such maturity date. Although the Company will have the option of settling the amount due in cash, or by delivery of shares of SAFECO common stock, the Company currently intends to settle in cash rather than by delivery of shares. The Company may prepay amounts due in connection with the Forward Transaction. During the term of the Forward Transaction, the Company will continue to receive dividends paid by SAFECO; however, any increase in the dividend amount above the present rate must be paid to the financial institution that is a party to the Forward Transaction. At June 30, 2003 the derivative portion of the Forward Transaction had a fair market value of $4,131,000, which is included in other assets in the accompanying Condensed Consolidated Balance Sheet. At June 30, 2003, $52,148,000 was outstanding under the Forward Transaction including accrued interest amounting to $5,229,000.

In March 2002, the broadcasting subsidiary entered into an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under the broadcast facility. The notional amount of the swap is $65,000,000, which reduces as payments are made on principal outstanding under the broadcast facility, until termination of the contract in March 2004. At June 30, 2003 the fair market value of the swap agreement was a liability of $2,787,000, which is included in other liabilities in the accompanying Condensed Consolidated Balance Sheet.

Changes in the fair market value of the Forward Transaction and the interest rate swap agreement are reported in Net gain on derivative instruments in the accompanying Condensed Consolidated Statement of Operations.

6. Television and radio broadcast rights and other broadcast commitments:

The broadcasting subsidiary acquires television and radio broadcast rights, and at June 30, 2003 has commitments under license agreements amounting to $69,360,000 for future rights to broadcast television and radio programs through 2008, and $10,658,000 in related fees. As these programs will not be available for broadcast until after June 30, 2003, they have been excluded from the financial statements in accordance with provision of Statement of Financial Accounting Standards No. 63, “Financial Reporting by Broadcasters”. In 2002, the broadcasting subsidiary acquired exclusive rights to sell available advertising time for a radio station in Seattle (“Joint Sales Agreement”). Under the Joint Sales Agreement, the broadcasting subsidiary has commitments for monthly payments totaling $12,400,000 through 2007.

7. Income (loss) per share:

Net income (loss) per share represents net income (loss) divided by the weighted average number of shares outstanding during the period. Net income (loss) per share assuming dilution represents net income (loss) divided by the weighted average number of shares outstanding, including the potentially dilutive impact of the stock options and restricted stock rights issued under the Company’s incentive plans. Common stock options and restricted stock rights are converted using the treasury stock method.

The weighted average number of shares outstanding for the six months ended June 30, 2003 was 8,594,479. The dilutive effect of 460 restricted stock rights and options to purchase 494,163 shares are excluded for the six month and three-month periods ended June 30, 2003 because such rights and options were anti-dilutive.

The weighted average number of shares outstanding for the six months ended June 30, 2002 was 8,592,183. The dilutive effect of 1,474 restricted stock rights and options to purchase 442,933 shares are excluded for the six months ended June 30, 2002 because such rights and options were anti-dilutive.

8. Stock-based compensation:

The Company accounts for common stock options and restricted common stock rights in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based compensation is reflected in net loss, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation (in thousands, except per share amounts):

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
	(Unaudited)						(Unaudited)
Net income (loss), as reported	$	(7,910	)	$	(68,611	)	$	(4,287	)	$	3,520
Deduct total stock-based employee compensation expense determined under the fair value based method for all awards, net of related income tax effect		(388	)		(416	)		(240	)		(247	)

Adjusted net income (loss)	$	(8,298	)	$	(69,027	)	$	(4,527	)	$	3,273

Income (loss) per share:
As reported	$	(0.92	)	$	(7.99	)	$	(0.50	)	$	0.41
Adjusted	$	(0.97	)	$	(8.04	)	$	(0.53	)	$	0.38
Income (loss) per share assuming dilution:
As reported	$	(0.92	)	$	(7.99	)	$	(0.50	)	$	0.41
Adjusted	$	(0.97	)	$	(8.04	)	$	(0.53	)	$	0.38

9. Segment information:

The Company operates its continuing operations as three principal business units: broadcasting, media services, and real estate. The Company has previously reported its television and radio operations as one reportable segment called “Broadcasting.” The Company also previously reported Fisher Plaza and the “all other” category as one reportable segment called “Media Services.” The information reported for the six and three-month periods ended June 30, 2002 has been restated to reflect the appropriate reportable segments pursuant to Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information” (FAS 131) and to reflect reclassification of discontinued operations.

Under the provisions of FAS 131 the Company reports financial data for four reportable segments: television, radio (included in the broadcasting business unit), Fisher Plaza (included in the media services business unit), real estate, and a remaining “all other” category. The television reportable segment includes the operations of the Company’s nine network-affiliated television stations (excluding the Georgia television stations, which are included in discontinued operations), and a 50% interest in a company that owns a tenth television station. The radio reportable segment includes the operations of the Company’s 27 radio stations (excluding the Portland radio stations, which are included in discontinued operations). Corporate expenses of the broadcasting business unit are allocated to the television and radio reportable segments based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment includes the operations of a communications center located in Seattle that serves as home of the Company’s Seattle television and radio operations, the Company’s corporate offices, and third-parties. The real estate reportable segment includes the Company’s proprietary commercial real estate and property management operations. The operations of Fisher Pathways, Inc., a provider of satellite transmission services, which is also included in the media services business unit, as well as the expenses of Fisher Media Services Company’s corporate group are included in an “all other” category. The results of operations of Fisher Entertainment LLC and Civia, Inc. are reported as discontinued operations as discussed in Note 4 to the Condensed Consolidated Financial Statements.

Revenue for each reportable segment is as follows:

	Six months ended June 30						Three months ended June 30
	2003			2002			2003			2002
Television	$	42,648		$	42,218		$	22,464		$	22,843
Radio		20,962			15,386			13,727			8,254
Fisher Plaza		3,437			2,055			929			989
Real estate		3,811			4,834			1,754			2,468
All other		612			392			318			187
Corporate and eliminations		(318	)		(258	)		(153	)		(69	)

	$	71,152		$	64,627		$	39,039		$	34,672

Income (loss) from continuing operations before interest and income taxes for each reportable segment is as follows (in thousands):

	Six months ended June 30						Three months ended June 30
	2003			2002 Restated			2003			2002 Restated
Television	$	1,702		$	(153	)	$	2,111		$	1,147
Radio		(1,648	)		1,223			293			1,192
Fisher Plaza		1,644			923			(408	)		353
Real estate		1,131			1,125			448			667
All other		(1,022	)		(836	)		(271	)		(575	)
Corporate and eliminations		(3,782	)		636			(3,728	)		6,021

Total segment income (loss) from continuing operations before income taxes		(1,975	)		2,918			(1,555	)		8,805
Interest expense		(10,149	)		(9,528	)		(4,613	)		(4,962	)

Consolidated income (loss) from continuing operations before income taxes	$	(12,124	)	$	(6,610	)	$	(6,168	)	$	3,843

Identifiable assets for each reportable segment are as follows (in thousands):

	June 30 2003		December 31 2002
			Restated
Television	$	84,908	$	104,500
Radio		51,899		44,818
Fisher Plaza		122,124		119,710
Real estate		46,383		50,993
All other		3,720		18,348
Corporate and eliminations		129,160		143,006

Continuing operations		438,194		481,375
Discontinued operations—net		64,542		64,616

	$	502,736	$	545,991

Identifiable assets by reportable segment are those assets used in the operations of each segment. Corporate assets are principally marketable securities.

10. Other commitments:

In connection with a review of strategic alternatives conducted during the fall of 2002 and winter of 2003, the Company entered into agreement with certain officers and employees, which require payments of $3,844,000 in January 2004 if the officers and employees continue their employment until that date. The Company is recognizing the cost of this obligation over the period covered by the agreements and, as of June 30, 2003, $1,978,000 was accrued. General and administrative expenses in the six months ended June 30, 2003 include $1,600,000 related to these agreements. The agreements also provide that if a change in control should occur, certain officers will receive severance payments totaling approximately $2,100,000 as well as health and welfare benefits. The Company will recognize this obligation when it is probable the executives are entitled to the benefits.

11. Subsequent events:

On July 30, 2003, the Company’s real estate subsidiary entered into an asset purchase agreement for the sale of West Lake Union Center and Fisher Business Center, the real estate subsidiary’s two remaining commercial properties. The aggregate purchase price for the sale of the properties is approximately $64 million. Completion of the sale is subject to the satisfaction of customary due diligence and closing conditions. Closing of the transaction is expected to occur in September of 2003. The sale is expected to result in a gain of approximately $20 million, net of income tax effects, producing net proceeds after income taxes and closing costs of approximately $51 million. The Company expects to use the majority of the net proceeds of the sale to reduce outstanding debt.

On August 21, 2003 the Company received a letter from the Nasdaq National Market informing the Company that it is in violation of Nasdaq Rule 4310(c)(14), which requires the Company to file required reports with the Securities and Exchange Commission. Nasdaq has determined that the Company is in violation of this rule as a result of the Company’s delay in filing its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003. The Nasdaq letter notes that the Company’s securities could be delisted if it does not request a hearing on the delisting by August 28, 2003. The Company has requested a hearing on the delisting matter, which resulted in an automatic stay of the delisting process. Pending the hearing the Company’s Common Stock is trading on the Nasdaq National Market under the symbol “FSCIE.” After this Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 is filed, the Company will seek Nasdaq approval to again trade under the symbol “FSCI.”

12. Reclassifications:

Certain prior-period balances have been reclassified to conform to the current-period presentation. Such reclassifications had no effect on operating results.

ITEM 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Financial Statements and related Notes thereto included elsewhere in this quarterly report on Form 10-Q. Some of the statements in this quarterly report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as `aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets’ or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. There are many risks and uncertainties that could cause actual results to differ materially from those predicted in our forward-looking statements, including, without limitation, those factors discussed under the caption “Additional Factors That May Affect Our Business, Financial Condition And Future Results”, and those discussed in our annual report on Form 10-K for the year ended December 31, 2002. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made in this report and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations. As used herein, unless the context requires otherwise, when we say “we”, “us”,” our”, or the “Company”, we are referring to Fisher Communications, Inc. and its consolidated subsidiaries.

This discussion is intended to provide an analysis of significant trends and material changes in our financial position and operating results of our business units during the three- and six-month periods ended June 30, 2003 compared with the corresponding periods in 2002.

On July 30, 2003, the Company’s real estate subsidiary entered into an asset purchase agreement for the sale of West Lake Union Center and Fisher Business Center, the real estate subsidiary’s two remaining commercial properties. The aggregate purchase price for the sale of the properties is approximately $64 million. Completion of the sale is subject to the satisfaction of customary due diligence and closing conditions. Closing of the transaction is expected to occur in September. The sale is expected to result in a gain of approximately $20 million net of income tax effects, producing net proceeds after income taxes and closing costs of approximately $51 million. The Company expects to use the majority of the net proceeds of the sale to reduce outstanding debt.

Percentage comparisons have been omitted within the following tables where they are not considered meaningful.

CRITICAL ACCOUNTING POLICIES

The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies below. We also have other accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results. For a detailed discussion on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements contained in our annual report on Form 10-K/A for the year ended December 31, 2002.

Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Allowance for doubtful accounts. We evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected. For all other customers, we recognize reserves for bad debts based on historical experience of bad debts as a percent of accounts receivable for each business unit, adjusted for relative improvements or deteriorations in the aging and changes in current economic conditions. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional charges may be required.

Television and radio broadcast rights. Television and radio broadcast rights are recorded as assets when the license period begins and the programs are available for broadcasting, at the gross amount of the related obligations. Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast after one year are considered noncurrent. The costs are charged to operations over their estimated broadcast periods using the straight-line method. Program obligations are classified as current or noncurrent in accordance with the payment terms of the license agreement. Costs of programs which are not available for broadcast are not recorded as assets and are disclosed as commitments.

The cost of television and radio broadcasting rights is reported in the Condensed Consolidated Balance Sheet at the lower of unamortized cost or estimated net realizable value, and is periodically reviewed for impairment. We estimate the net realizable value of our broadcasting rights based on techniques that rely on significant assumptions. If management’s expectations of programming usefulness are revised downward, it may be necessary to write down unamortized cost to estimated net realizable value.

Accounting for derivative instruments. We utilize an interest rate swap in the management of our variable rate exposure. The interest rate swap is held at fair value with the change in fair value being recorded in the statement of income.

We entered into a variable forward sales transaction with a financial institution. Our obligations under the Forward Transaction are collateralized by 3,000,000 shares of SAFECO Corporation common stock owned by us. A portion of the Forward Transaction will be considered a derivative and, as such, we will periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. We may in the future designate the Forward Transaction as a hedge and, accordingly, the change in fair value will be recorded in the income statement or in other comprehensive income depending on its effectiveness.

Goodwill and long-lived assets. Goodwill represents the excess of purchase price of certain broadcast properties over the fair value of tangible and identifiable intangible net assets acquired and is accounted for under the provisions of Statement of Financial Accounting Standards No. 142 (FAS 142), which we adopted as of January 1, 2002. Under FAS 142, goodwill and intangible assets with indefinite useful lives are no longer amortized but are tested for impairment at least on an annual basis.

The goodwill impairment test involves a comparison of the fair value of each of our reporting units, with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying value of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested. Fair values are determined based on valuations prepared by third party valuation consultants that rely primarily on the discounted cash flow method. This method uses future projections of cash flows from each of our reporting units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of our weighted average cost of capital. To the extent they have been separately identified, our indefinite-lived assets (broadcast licenses) are tested for impairment on an annual basis by applying a fair-value-based test as required by FAS 142. Our evaluations of fair values include analyses based on the future cash flows generated by the underlying assets, estimated trends and other relevant determinants of fair value for these assets. If the fair value of the asset determined is less than its carrying amount, a loss is recognized for the difference between the fair value and its carrying value. Changes in any of these estimates, projections and assumptions could have a material effect on the fair value of these assets in future measurement periods and result in an impairment of goodwill or indefinite-lived intangibles which could materially effect our results of operations.

We evaluate the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable as required by Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (FAS 144). We use our judgment when applying the impairment rules to determine when an impairment test is necessary. Factors we consider which could trigger an impairment review include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant negative cash flows or industry trends.

Impairment losses are measured as the amount by which the carrying value of an asset exceeds its estimated fair value, which is based on future discounted cash flows. In estimating these future cash flows we use future projections of cash flows directly associated with and that were expected to arise as a direct result of the use and eventual disposition of the assets. These projections rely on significant assumptions. If it is determined that a long-lived asset is not recoverable, an impairment loss would be calculated based on the excess of the carrying amount of the long-lived asset over its fair value, primarily determined based on discounted cash flows. Changes in any of our estimates could have a material effect on the estimated future cash flows expected to be generated by the asset and result in a future impairment of the involved assets with a material effect on our future results of operations.

Pension benefits. We maintain a noncontributory supplemental retirement program for key management. We also maintained a qualified defined benefit plan covering our non-broadcasting employees, which ceased accruing benefit in 2001 with plan assets distributed to participants between 2001 and the first half of 2003. The cost of these plans is reported and accounted for in accordance with Financial Accounting Standards Board Statements 87, 88 and 132. These Statements require significant assumptions regarding discount rates, salary increases and asset returns. We believe that our estimates are reasonable for these key actuarial assumptions; however future actual results will likely differ from our estimates, and these differences could materially affect our future results of operation either unfavorably or favorably.

RESTATEMENT

Goodwill Impairment—Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (FAS 142). FAS 142 requires the Company to test goodwill and intangible assets for impairment upon adoption and to test goodwill at least annually, or whenever events indicate that an impairment may exist. Upon the adoption of FAS 142, the Company, with the concurrence of its independent auditors, concluded there was no impairment of goodwill. Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2002, the Company and the independent auditors determined that in performing the Company’s initial impairment test, the level (reporting unit) at which the company should assess the goodwill for impairment had been incorrectly identified. The Company has determined that the impairment test should have been conducted at the operating segment level, which consists, with respect to the broadcast operations, of the Company’s ten television and radio station groups. As a result of the reassessment of the reporting unit, the Company reperformed the first step of the transitional impairment test, which indicated that impairment existed. Completion of the second step of the transitional impairment test resulted in a pre-tax goodwill impairment charge of $99,035,000 related to five television reporting units and a related tax benefit of $34,662,000 (as the aforementioned goodwill was deductible for tax purposes). The required annual impairment test was also reperformed based on the new determination of reporting units, resulting in no further impairment.

Pension Plan—In addition, subsequent to the issuance of the consolidated financial statements as of and for the year ended December 31, 2002 and the unaudited condensed consolidated financial statements as of March 31, 2003 and for the three months then ended, the Company concluded that certain pension related expenses should have been recorded in the first quarter of 2003 and in prior periods.

quarter of 2003. In addition, the Company determined that additional pension benefits paid in 2003 to certain retired participants who worked beyond their normal retirement age (“Late Retirees”) had not been recognized over periods in which those employees provided services. Accordingly, the Company revised its financial statements to record the settlement losses and the additional obligation to Late Retirees (cumulatively, the “Pension Adjustments”). The impact of recording the Pension Adjustments also had the effect of reducing Retained Earnings by $433,000 as of December 31, 2002, increasing Accrued Retirement Benefits by $681,000, and reducing Deferred Income Tax Liabilities by $248,000, to reflect the pension liability that should have been recorded as of that date. Pension adjustments to record the additional expense that should have been recognized from January 1, 2000 through December 31, 2002 were recorded in the fourth quarter of 2002 and amounted to $134,000 after taxes. Amounts related to 2000, 2001, and the first three quarters of 2002, totaling $6,000, net of taxes, were not significant in relation to the fourth quarter of 2002 or to the prior periods. The impact of recording the Pension Adjustments for the first quarter of 2003 was an increase in net loss for the quarter by $282,000.

See Note 2 to the condensed consolidated financial statements for a summary of the significant effects of the restatement on the Company’s condensed consolidated statement of operations for the six months ended June 30, 2002 and the condensed consolidated balance sheet as of December 31, 2002.

CONSOLIDATED RESULTS OF OPERATIONS

Operating results for the six months ended June 30, 2003 showed a consolidated loss of $7,910,000 including loss from discontinued operations amounting to $515,000. Operating results for the six months ended June 30, 2002 showed a consolidated loss of $68,611,000 including loss from discontinued operations amounting to $669,000 and loss amounting to $64,373,000, net of income taxes, from the cumulative effect of a change in accounting principle.

Operating results for the three months ended June 30, 2003 showed consolidated net loss of $4,287,000. Second quarter 2003 results include net loss from discontinued operations of $564,000. Operating results for the three months ended June 30, 2002 showed consolidated net income of $3,520,000 including a net gain on derivative instruments amounting to $6,828,000, before income tax effects. Excluding net after-tax gains on derivative instruments, second quarter results would have been a loss of $785,000.

Revenue

	Six months ended June 30								Three months ended June 30
	2003			% Change		2002			2003			% Change		2002
Television	$	42,648,000		1.0	%	$	42,218,000		$	22,464,000		-1.7	%	$	22,843,000
Radio		20,962,000		36.2	%		15,386,000			13,727,000		66.3	%		8,254,000
Fisher Plaza		3,437,000		67.3	%		2,055,000			929,000		-6.0	%		989,000
Real estate		3,811,000		-21.2	%		4,834,000			1,754,000		-28.9	%		2,468,000
All other		612,000		56.1	%		392,000			318,000		69.7	%		187,000
Corporate & eliminations		(318,000	)	23.0	%		(258,000	)		(153,000	)	121.7	%		(69,000	)

Consolidated	$	71,152,000		10.1	%	$	64,627,000		$	39,039,000		12.6	%	$	34,672,000

During the six-month period ended June 30, 2003, net revenue for our Seattle television station increased 1.4% while our Portland television station experienced an increase of 1.8%. Our smaller market television operations experienced mixed revenue results with the Oregon and Boise, Idaho smaller market stations reporting decreased revenue of 7.0% and 8.2%, respectively and the Washington and Idaho Falls, Idaho smaller market stations each reporting increased revenues of approximately 15%.

Net revenue at our Seattle television station increased 1% during the second quarter, while our Portland station reported a decrease of 1.3%. Our smaller market television operations experienced mixed revenue results with the Oregon and Boise, Idaho smaller market stations reporting decreased net revenue of 13.4% and 13.8%, respectively and the Washington and Idaho Falls, Idaho smaller market stations reporting increased revenues of 12.2% and 5.3%, respectively.

Compared with the similar periods last year, our television stations generally experienced increased revenue from local advertising and decreased revenue from national and political advertising and paid programming. The comparisons for our Oregon stations are impacted by significant revenue from political advertising reported during 2002. Television revenues are also impacted by the popularity of the programs presented by our network affiliates.

Based on information published by Miller, Kaplan, Arase & Co. (Miller Kaplan), local and national revenue for the overall Seattle spot television market increased 2.9% and overall Portland spot revenue declined 2.7% for the six months ended June 30, 2003. In comparison, our Seattle television station spot revenue was relatively flat while our Portland television station spot revenue decreased 2.2% during the same six-month period.

During the six-month period ended June 30, 2003, our Seattle radio operation experienced a 50.2% increase in net revenue, primarily due to revenue from broadcast of the Seattle Mariners baseball games, under a six-year contract that began with the 2003 baseball season. Miller Kaplan data, which excludes sports revenue, indicates that local and national radio revenues for the Seattle radio market increased 4.5% during the first half of 2003. Excluding sports revenue, local and national revenue for our Seattle radio operations decreased 1.1% for the same period. As a result of increased local and national sales, net revenue increased 9.1% at our small market radio stations in Eastern Washington and Montana.

The revenue increase for Fisher Plaza for the six months ended June 30, 2003 is primarily due to a significant penalty paid by a tenant during the first quarter for early termination of premises agreements. The decline in revenue in the second quarter compared to last year’s second quarter is due in part to the temporary vacancy of the aforementioned tenant until the vacated space was fully occupied in July.

The comparison of real estate revenue is impacted by rents for the Lake Union properties that are included in results for the first six months of 2002, but are not included in 2003 as the property was sold in September 2002. Our real estate subsidiary has agreements to provide certain management and other services to the purchaser of the property. Based on this continuing involvement, the revenue and results of operations from Lake Union through the date the sale closed are reported as continuing operations. The subsidiary also provides management services to other third party clients. Real estate revenue includes management service fees from third party clients amounting to $129,000 and $67,000 in the six and three months ended June 30, 2003, respectively.

Revenue in the all other category is attributable to Fisher Pathways. The increases in revenue during the three- and six-month periods ended June 30, 2003 as compared to the comparable prior year periods are due to increased demand for live news broadcasts over Fisher Pathways’ transmission facilities.

Corporate & eliminations includes the elimination of management fees recognized as revenue by the real estate segment, which are reported as operating expenses by the Fisher Plaza segment. There is no impact on net income as such amounts are eliminated in the Consolidated Financial Statements.

Cost of services sold

	Six months ended June 30								Three months ended June 30
	2003			% Change		2002			2003			% Change		2002
Television	$	21,856,000		-3.0	%	$	22,535,000		$	10,977,000		-4.1	%	$	11,447,000
Radio		11,708,000		109.9	%		5,578,000			8,014,000		245.1	%		2,323,000
Fisher Plaza		1,363,000		111.3	%		645,000			990,000		171.3	%		366,000
Real estate		722,000		-13.5	%		835,000			381,000		-4.9	%		401,000
All other		283,000		36.0	%		208,000			138,000		32.5	%		105,000
Corporate and eliminations		(114,000	)	-124.4	%		467,000			(254,000	)	-206.6	%		239,000

Consolidated	$	35,818,000		18.3	%	$	30,268,000		$	20,246,000		36.1	%	$	14,881,000
Percentage of revenue		50.3	%				46.8	%		51.9	%				42.9	%

The cost of services sold consists primarily of costs to acquire, produce, promote, and broadcast television and radio programming, operating costs of Fisher Plaza, and costs to operate the properties held by the real estate segment. These costs are relatively fixed in nature, and do not necessarily vary on a proportional basis with revenue.

The decrease in the cost of services sold in the television segment during the three- and six-month periods ended June 30, 2003 as compared to the comparable prior year periods is primarily due to a reduction in the cost of syndicated programming as a result of replacing The Rosie O’Donnell show, which was cancelled in September 2002, with less costly programs. That decline was partially offset by increased engineering and news expenses.

The increase in the cost of services sold in the radio segment during the three- and six-month periods ended June 30, 2003 as compared to the comparable prior year periods is primarily related to increased costs at our Seattle radio operations associated with the broadcast of Seattle Mariners baseball and the 24 hour news format adopted by KOMO AM in the fall of 2002.

The increase in the cost of services sold at Fisher Plaza is due to increased operating costs at that facility, including increases in insurance expense and property taxes, and to lower reimbursement from tenants as a result of a vacancy.

The decline in real estate operating expenses relates primarily to costs of operating the Lake Union properties during the first six months of 2002. Those properties were sold in the fall of 2002 and, therefore, are excluded from 2003 results.

The all other category includes the cost of operations of Fisher Pathways. The operating expense increase is attributable to costs directly associated with increased revenue.

Selling expenses

	Six months ended June 30								Three months ended June 30
	2003			% Change		2002			2003			% Change		2002
Television	$	5,347,000		18.8	%	$	4,501,000		$	2,687,000		11.9	%	$	2,402,000
Radio		6,498,000		54.2	%		4,214,000			3,296,000		32.4	%		2,489,000
All other		321,000		196.2	%		108,000			154,000		224.9	%		47,000

Consolidated	$	12,166,000		37.9	%	$	8,823,000		$	6,137,000		24.3	%	$	4,938,000
Percentage of revenue		17.1	%				13.7	%		15.7	%				14.2	%

Each of our television stations experienced an increase in selling expenses during the three- and six-month periods ended June 30, 2003 as compared to the comparable prior year periods. The largest increase occurred at KATU TV in Portland, which experienced increased costs for salaries, commissions, advertising, and rating services.

For the radio segment, selling expenses increased significantly at our Seattle Radio operations in connection with a joint sales agreement that became effective in March 2002, and additional sales personnel and other costs related to the rights agreement to broadcast Seattle Mariners baseball games on KOMO AM.

The increase in selling expenses in the all other category is due to increased marketing efforts for Fisher Plaza by the Media Services corporate group.

General and administrative expenses

	Six months ended June 30								Three months ended June 30
	2003			% Change		2002			2003			% Change		2002
Television	$	9,048,000		0.7	%	$	8,982,000		$	4,434,000		-3.2	%	$	4,582,000
Radio		4,176,000		12.2	%		3,721,000			2,049,000		11.5	%		1,838,000
Real estate		923,000		-22.9	%		1,196,000			416,000		-24.9	%		555,000
All other		452,000		-38.6	%		737,000			59,000		-88.5	%		516,000
Corporate and eliminations		7,364,000		110.3	%		3,501,000			4,204,000		125.7	%		1,862,000

Consolidated	$	21,963,000		21.1	%	$	18,137,000		$	11,162,000		19.3	%	$	9,353,000
Percentage of revenue		30.9	%				28.1	%		28.1	%				27.0	%

The increase in general and administrative expenses at the television segment during the six-month period ended June 30, 2003 as compared to the corresponding prior year period is primarily due to higher medical benefits and other employee-related costs. The segment experienced reductions during the second quarter in a number of expense categories due to emphasis on expense control.

The increase in general and administrative expenses at the radio segment during the three- and six-month periods ended June 30, 2003 as compared to the corresponding prior year periods is primarily attributable to increased payroll taxes and employee benefits at our Seattle radio operations as a result of additional personnel required for the all-news format and broadcast of Seattle Mariners baseball.

The decrease in general and administrative expenses in the real estate segment during the three- and six-month periods ended June 30, 2003 as compared to the corresponding prior year periods is primarily attributable to a decrease in salaries and related costs as a result of staff reductions as the Company continues to reduce its real estate portfolio.

General and administrative expenses in the all other category include the expenses of Fisher Pathways and the Media Services corporate group. The increase during the six-months ended June 30, 2003 as compared to the corresponding prior year periods is primarily attributable to costs incurred to explore and evaluate restructuring alternatives for Fisher Pathways, Fisher Entertainment, and Civia during the first quarter of 2003.

The increase in corporate general and administrative expenses during the three- and six-month periods ended June 30, 2003 as compared to the corresponding prior year periods is primarily related to legal and consulting fees incurred in connection with a review of strategic alternatives that concluded in February 2003, pension plan termination amounting to $700,000, and severance as the result of restructuring amounting to $700,000. Corporate general and administrative expenses in 2003 include $1,600,000 related to agreements with certain officers and employees which are payable in January 2004, including the following amounts relating to other segments: $650,000 television, $350,000 radio, $30,000 real estate, and $70,000 all other.

Depreciation

	Six months ended June 30								Three months ended June 30
	2003			% Change		2002			2003			% Change		2002
Television	$	5,805,000		-0.5	%	$	5,834,000		$	2,865,000		-0.2	%	$	2,871,000
Radio		723,000		76.1	%		410,000			354,000		75.1	%		202,000
Fisher Plaza		795,000		1.3	%		784,000			347,000		-19.0	%		429,000
Real estate		1,266,000		-13.3	%		1,459,000			648,000		-10.7	%		725,000
All other		509,000		321.5	%		120,000			238,000		310.3	%		58,000
Corporate and eliminations		96,000		-19.3	%		119,000			48,000		-18.6	%		59,000

Consolidated	$	9,194,000		5.4	%	$	8,726,000		$	4,500,000		3.5	%	$	4,344,000
Percentage of revenue		12.9	%				13.5	%		11.5	%				12.5	%

The increase in depreciation at the radio segment during the three- and six-month periods ended June 30, 2003 as compared to the corresponding prior year periods is primarily attributable to capital expenditures made in connection with the relocation of Seattle radio operations to Fisher Plaza in fall of 2002.

The decrease in depreciation at our real estate segment during the three- and six-month periods ended June 30, 2003 as compared to the corresponding prior year periods relates primarily to depreciation of the Lake Union properties during the first half of 2002. Those properties were sold in the fall of 2002 and, therefore, are excluded from 2003 results.

The increase in depreciation in the all other category is attributable to depreciation of web publishing software placed in service late in 2002 by the Media Services corporate group.

Income (Loss) from operations

	Six months ended June 30								Three months ended June 30
	2003			% Change		2002			2003			% Change		2002
Television	$	592,000		61.2	%	$	367,000		$	1,501,000		-2.5	%	$	1,540,000
Radio		(2,144,000	)	-246.5	%		1,463,000			14,000		-99.0	%		1,402,000
Fisher Plaza		1,280,000		104.4	%		626,000			(408,000	)	-309.5	%		195,000
Real estate		900,000		-33.0	%		1,342,000			309,000		-60.7	%		787,000
All other		(953,000	)	21.9	%		(781,000	)		(271,000	)	-49.6	%		(538,000	)
Corporate and eliminations		(7,664,000	)	76.4	%		(4,344,000	)		(4,151,000	)	86.1	%		(2,230,000	)

Consolidated	$	(7,989,000	)			$	(1,327,000	)	$	(3,006,000	)			$	1,156,000

Income (loss) from operations by segment consists of revenue less operating expenses. In computing income from operations by segment, other income net, net gain on derivative instruments, and equity in operations of equity investees have not been included, and loss from extinguishment of long-term debt, interest expense, and income taxes have not been deducted.

Net gain on derivative instruments

Six months ended June 30		Three months ended June 30
2003	2002	2003	2002
$411,000	$6,103,000	$653,000	$6,828,000

We record derivative instruments as assets and liabilities in our consolidated balance sheet and recognize changes in fair values in our consolidated statement of operations. As described in Note 5 to our unaudited Condensed Consolidated Financial Statements we have two derivative instruments: (i) an interest rate swap, which is included in Other liabilities and (ii) the derivative portion of a variable forward transaction, which is included in Other assets. The fair value of our derivatives is based on quotations from third parties.

During the first six months of 2003, net gain on derivative instruments includes unrealized gain from an increase in the fair value of an interest rate swap agreement amounting to $1,509,000, partially offset by unrealized loss resulting from a decrease in fair value of a variable forward sales transaction amounting to $1,096,000. The second quarter of 2003 includes unrealized gain from an increase in the fair value of an interest rate swap agreement amounting to $857,000, partially offset by unrealized loss resulting from a decrease in fair value of a variable forward sales transaction amounting to $204,000.

The amounts for 2002 include unrealized gain resulting from an increase in fair value of a variable forward sales transaction amounting to $9,677,000 in the first six months of 2002 and $7,637,000 in the second quarter of 2002, and unrealized loss from a decline in fair value of an interest rate swap agreement amounting to $938,000 in the first six months and $809,000 in the second quarter of 2002.

Loss from extinguishment of long-term debt

Six months ended June 30		Three months ended June 30
2003	2002	2003	2002
$ -0-	$(3,264,000)	$ -0-	$ -0-

We repaid certain loans in March 2002 and, as a result, expensed deferred loan costs amounting to $3,264,000.

Other income, net

Six months ended June 30				Three months ended June 30
2003	% Change	2002		2003		% Change	2002
$ 5,601,000	307.6%	$	1,374,000	$	800,000	1.5%	$	788,000

Other income, net includes dividends received on marketable securities and, to a lesser extent, interest and miscellaneous income. The increase in the first six months of 2003 as compared to the corresponding prior year period is primarily due to gains on sale of marketable securities amounting to $3,675,000 and interest income from prepayment of an installment note receivable.

Interest expense

Six months ended June 30				Three months ended June 30
2003	% Change	2002		2003		% Change	2002
$10,149,000	6.5%	$	9,528,000	$	4,613,000	-7.0%	$	4,962,000

The increase in interest expense for the six months ended June 30, 2003 as compared to the corresponding prior year period resulted from several factors, including: higher interest rates on some borrowings; higher interest paid under an interest rate swap agreement; and a premium paid in February 2003 in connection with prepayment of certain long-term debt. Interest capitalized in connection with the Fisher Plaza project amounted to $1,546,000 and $1,027,000 during the six months ended June 30, 2003 and 2002, respectively. Interest capitalized for the three months ended June 30, 2003 and 2002 was $877,000 and $628,000, respectively.

Provision for federal and state income taxes (benefit)

	Six months ended June 30				Three months ended June 30
	2003		2002		2003		2002
	$	(4,729,000)	$	(3,041,000)	$	(2,445,000)	$	397,000
Effective tax rate		39.0%		46.0%		39.6%		10.3%

The provision for federal and state income taxes varies directly with pre-tax income. The effective tax rate varies from the statutory rate primarily due to a deduction for dividends received, offset by the impact of state income taxes.

Other comprehensive income (loss)

Six months ended June 30		Three months ended June 30
2003	2002	2003	2002
$(402,000)	$2,169,000	$625,000	$(2,202,000)

Other comprehensive income (loss) is net of income taxes, and primarily includes unrealized gain or loss on our marketable securities. The 2003 amount also includes an adjustment to a minimum pension liability relating to a defined benefit pension plan that was terminated in 2003. During a portion of 2002, the effective portion of the change in fair value of an interest rate swap agreement is also included. Other comprehensive income or losses are reported as accumulated other comprehensive income, a separate component of stockholders’ equity.

During the six months ended June 30, 2003, the value of our marketable securities increased $1,212,000, net of tax. Also during the period, we realized gain amounting to $2,024,000, net of tax, from sale of our investment in Weyerhaeuser Company common stock.

At June 30, 2003, our marketable securities consisted of 3,002,376 shares of SAFECO Corporation. The per share market price of SAFECO Corporation common stock was as follows

December 31, 2002	$	34.67	December 31, 2001	$	31.15
March 31, 2003	$	34.97	March 31, 2002	$	32.04
June 30, 2003	$	35.29	June 30, 2002	$	30.89

During the period from January 1, 2002 through March 21, 2002, we used an interest rate swap, designated as a cash flow hedge, to manage exposure to interest rate risks. During this period the fair value of the swap increased $543,000, net of tax, which is recorded in other comprehensive income. In connection with the refinancing of our long-term debt in March of 2002, the swap agreement was terminated and the remaining negative fair market value of $2,636,000 ($1,713,000 net of tax benefit) was reclassified to operations.

During the six months ended June 30, 2003 we also recorded changes in our additional minimum pension liability amounting to $410,000, net of income taxes, in connection with one of our defined benefit pension plans that was finally settled in 2003.

Liquidity and Capital Resources

As of June 30, 2003, we had working capital of $26,466,000 and cash and short-term cash investments totaling $9,854,000. We intend to finance working capital, debt service, capital expenditures, and dividend requirements primarily through operating activities. As of June 30, 2003, approximately $36,000,000 is available under existing credit facilities.

Net cash provided by operating activities during the six months ended June 30, 2003 was $168,000. Net cash provided by or used in operating activities consists of our net income or loss, increased by non-cash expenses such as depreciation and amortization, and adjusted by changes in operating assets and liabilities. Net cash provided by investing activities during the period was $15,012,000, including restricted cash of $12,778,000 that became available for general corporate purposes during the first quarter, proceeds from sale of marketable securities of $5,169,000 and proceeds from collection of an installment note receivable of $3,185,000, all reduced by $5,794,000 invested for purchase of property, plant and equipment (including the Fisher Plaza project) and purchase of a radio station license. Net cash used in financing activities was $28,841,000, primarily for payments on borrowing agreements and mortgage loans.

As of June 30, 2003, future maturities of notes payable and long-term debt, and obligations for television and radio broadcast rights are as follows (in thousands):

	Notes Payable and Long-Term Debt		Broadcast Rights
2003	$	4,161	$	5,191
2004		8,784		42
2005		85,770		79
2006		45,252		21
2007		26,117
Thereafter		97,038

	$	267,122	$	5,333

Our broadcasting subsidiary acquires television and radio broadcast rights, and at June 30, 2003 has commitments under license agreements amounting to $69,360,000 for future rights to broadcast television and radio programs through 2008, and $10,658,000 in related fees. As these programs will not be available for broadcast until after June 30, 2003, they have been excluded from the financial statements in accordance with provision of Statement of Financial Accounting Standards No. 63. “Financial Reporting by Broadcasters”. In addition, our broadcasting subsidiary has commitments under a Joint Sales Agreement totaling $12,400,000 through 2007.

ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND FUTURE RESULTS

The following risk factors and other information included in this quarterly report should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition and future results could be materially adversely affected.

A continuing economic downturn in the Seattle, Washington or Portland, Oregon areas or in the national economy could adversely affect our operations, revenue, cash flow and earnings.

Our operations are concentrated primarily in the Pacific Northwest. The Seattle, Washington and Portland, Oregon markets are particularly important for our financial well being. Operating results during 2002 and 2003 were adversely impacted by a soft economy, and a continuing economic downturn in these markets could have a material adverse effect on our operations and financial condition. Because our costs of services are relatively fixed, we may be unable to significantly reduce costs if our revenues continue to decline. If our revenues do not increase or if they continue to decline, we could continue to suffer net losses or such net losses could increase. In addition, a continued downturn in the national economy has resulted and may continue to result in decreased national advertising sales. This could have an adverse affect on our results of operations because national advertising sales represent approximately one-third of our television advertising net revenue.

Our restructuring may cause disruption of operations and distraction of management, and may not achieve the desired results.

We continue to implement a restructuring of our corporate enterprise. This restructuring may disrupt operations and distract management, which could have a material adverse effect on our operating results. We cannot predict whether this restructuring will achieve the desired benefits, or whether our Company will be able to fully integrate our broadcast communications and other operations. Because we do not control all aspects of the proposed sales or shut down activities we cannot assure you that all such activities will occur. We cannot assure you that the restructuring will be completed in a timely manner or that any benefits of the restructuring will justify its costs. We may incur costs in connection with the restructuring in a number of areas, including professional fees, marketing expenses, employment expenses, and administrative expenses. In addition, we may incur additional costs, which we are unable to predict at this time. Our proposed restructuring involves the upstream merger of Fisher Broadcasting Company into Fisher Communications. We may determine that there are regulatory or contractual restrictions that may cause us to choose not to consummate this merger.

Our proposed sale of the Georgia television stations, the Portland radio stations, and the commercial property assets and property management operations of Fisher Properties may not take place.

In January 2003, we announced that we executed agreements to sell our Georgia television stations to a third party. We subsequently announced that we executed an agreement to sell our Portland radio station to a different third party. We may be unable to close the sale of the Georgia stations or the Portland stations or the sales may not take place on the same terms that were previously announced, if we do not obtain FCC approval or other necessary consents. Informal objections to the applications seeking consent to the assignment of licenses for the Georgia and Portland stations were filed with the FCC, which may delay or prevent us from closing the sale of the stations. Also, if changes in the FCC’s multiple ownership rules, which were adopted by the FCC on June 2, 2003, but stayed by the Courts on September 3, 2003, are implemented, it may be necessary for the proposed buyer of the Portland stations to take steps to sell one of its existing radio holdings in the Portland radio market in order to obtain FCC consent to the transaction. While the buyer submitted an application in August 2003 to dispose of one of its existing radio stations, there is no assurance that this will be approved by the FCC or actually consummated on a timely basis, if at all. In August 2003 we announced that we entered into an agreement to sell the remaining commercial real estate properties held by our real estate subsidiary. The sale of the two commercial properties is subject to closing conditions, including customary due diligence, and may not occur, or may not occur on the terms (including aggregate purchase price) previously described by us, if those closing conditions are not satisfied.

Our debt service consumes a substantial portion of the cash we generate, but our ability to generate cash depends on many factors beyond our control.

We currently use a significant portion of our operating cash flow to service our debt. Our leverage makes us vulnerable to an increase in interest rates or a downturn in the operating performance of our businesses or a decline in general economic conditions. It further limits our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or other purposes, and may limit our ability to pay dividends in the future. Finally, it inhibits our ability to compete with competitors who are less leveraged than we are, and it constrains our ability to react to changing market conditions, changes in our industry and economic downturns.

Prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to satisfy our debt obligations and our goals to reduce our debt. If in the future we cannot generate sufficient cash flow from operations to meet our obligations, we may need to refinance our debt, obtain additional financing, forego capital expenditures, or sell assets. Any of these actions could adversely affect the value of our common stock. We cannot assure you that we will generate sufficient cash flow or be able to obtain sufficient funding or take other actions to satisfy our debt service requirements.

In addition, our debt instruments contain covenants that require us to maintain certain financial ratios. If we are unable to generate sufficient revenue and are unable to reduce expenses we may be deemed in breach these covenants, which could result in an acceleration of our debt.

Foreign hostilities and further terrorist attacks may affect our revenues and results of operations.

Our broadcasting operations experienced a loss of advertising revenue and incurred additional operating expenses during the recent war with Iraq. In the future, we may experience a loss of advertising revenue and incur additional broadcasting expenses in the event the United States engages in foreign hostilities or in the event there is a terrorist attack against the United States. A significant news event like a war or terrorist attack will likely result in the preemption of regularly scheduled programming by network news coverage of the event. As a result, advertising may not be aired and the revenue for such advertising may be lost unless the broadcasting station is able to run the advertising at agreed-upon times in the future. There can be no assurance that advertisers will agree to run such advertising in future time periods or that space will be available for such advertising. We cannot predict the duration of such preemption of local programming if it occurs. In addition, our broadcasting stations may incur additional expenses as a result of expanded local news coverage of the local impact of a war or terrorist attack. The loss of revenue and increased expenses could negatively affect our results of operations.

The performance of the television networks could harm our operating results.

The operating results of our broadcasting operations are primarily dependent on advertising revenues. Our Seattle and Portland television stations are affiliated with the ABC Television Network. Popularity of programming on ABC lagged behind other networks during 2002 and 2003, and contributed to a decline in audience ratings, which negatively impacted revenues for our Seattle and Portland television stations. Continued weak performance by ABC, a decline in performance by CBS or FOX, or an adverse change in performance by other networks or network program suppliers, could harm our business and results of operations.

Competition in the broadcasting industry and the rise of alternative entertainment and communications media may result in loss of audience share and advertising revenue by our stations.

We cannot assure you that any of our stations will maintain or increase its current audience ratings or advertising revenues. Fisher Broadcasting’s television and radio stations face intense competition from local network affiliates and independent stations, as well as from cable and alternative methods of broadcasting brought about by technological advances and innovations. The stations compete for audiences on the basis of programming popularity, which has a direct effect on advertising rates. Additional significant factors affecting a station’s competitive position include assigned frequency and signal strength. The possible rise in popularity of competing entertainment and communications media could also have a materially adverse effect on Fisher Broadcasting’s audience share and advertising revenues. In addition, our principal marketing representative for the sale of national advertising for our Seattle and Portland television and radio stations is owned by a competitor, and the success of their efforts in selling national advertising is beyond our control. We cannot predict either the extent to which such competition will materialize or, if such competition materializes, the extent of its effect on our business.

Syndication agreements are subject to cancellation, and such cancellations may affect a station’s programming schedule. The syndicator for several of our talk radio programs recently acquired radio stations in the Seattle market, and competes with our Seattle radio stations. We can give no assurance that we will be able to retain the rights to such programs once our current contracts for these programs expire. We were recently notified by this syndicator that it was canceling the agreement for one of the most popular programs broadcast by one of our stations. We cannot predict the effect of this cancellation on our revenues, cash flows, or results of operations.

The FCC recently adopted modifications to its national and local television ownership limitations, its prohibition on common ownership of newspapers and broadcast stations in the same market, as well as its local radio ownership limitations. If the rules are implemented as adopted, large broadcast groups would be allowed to expand further their ownership on a national basis, a single entity would be permitted to own more than one television station in markets with fewer independently owned stations, and the rules would allow consolidated newspaper and broadcast ownership and operation in several of our markets. As a result of the rules change, our existing operations could face increased competition from entities with significantly greater resources, and greater economies of scale, than Fisher Broadcasting. The new radio multiple ownership rules could limit our ability to acquire additional radio stations in existing markets which we serve. There are several proposals pending in Congress to modify or repeal the new FCC rules, several parties have filed petitions seeking FCC reconsideration of the new rules, and a number of Notices of Appeal have been filed seeking court review of the rules, On September 3, 2003, the United States Court of Appeals for the Third Circuit issued an Order staying the effectiveness of the new media ownership rules pending review on appeal. On September 5, 2003, the FCC issued an order placing a freeze until further notice on the filing of all applications on certain FCC forms used to obtain consent to the construction or modification of radio and television stations or the assignment or transfer of control of such stations. We cannot predict when the freeze will be lifted or whether or when the new rules will be implemented as adopted, modified, reversed by the Courts or repealed in their entirety.

Our operating results are dependent on the success of programming aired by our television and radio stations.

We make significant commitments to acquire rights to television and radio programs under multi-year agreements. The success of such programs is dependent partly upon unpredictable and volatile factors beyond our control such as audience preferences, competing programming, and the availability of other entertainment activities. Audience preferences could cause our programming not to gain popularity or decline in popularity, which could cause our advertising revenues to decline. In some instances, we may have to replace programs before their costs have been fully-amortized, resulting in write-offs that increase operating costs.

In April 2002 we acquired the radio broadcast rights for the Seattle Mariners baseball team for a term of six years. The success of this programming is dependent on some factors beyond our control, such as the continued competitiveness of the Seattle Mariners and the successful marketing of the team by the team’s owners. If the Seattle Mariners fail to maintain their current fan base, the number of listeners to our radio broadcasts will likely decrease, which would harm our ability to generate anticipated advertising dollars.

We converted one of our Seattle radio stations, KOMO AM, to an “all news” format which has higher costs than the previous format. If we are unable to successfully increase the number of listeners, our margins could be adversely affected. In March 2002, we entered into a joint sales agreement with KING FM, which is owned and operated by a third-party. Our success in selling advertising under this agreement is closely tied to the station’s programming performance, which is not under our control. If the station’s ratings performance does not improve consistently, it will harm our ability to recoup our costs and generate a profit from this agreement.

The FCC’s extensive regulation of the broadcasting industry limits our ability to own and operate television and radio stations and other media outlets.

The broadcasting industry is subject to extensive regulation by the FCC under the Communications Act of 1934, as amended. Compliance with and the effects of existing and future regulations could have a material adverse impact on us. Issuance, renewal or transfer of broadcast station operating licenses requires FCC approval, and we cannot operate our stations without FCC licenses. Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly egregious violations, the denial of a license renewal application or revocation of a license. While the majority of such licenses are renewed by the FCC, there can be no assurance that Fisher Broadcasting’s licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If the FCC decides to include conditions or qualifications in any of our licenses, we may be limited in the manner in which we may operate the affected stations.

The Communications Act and FCC rules impose specific limits on the number of stations and other media outlets an entity can own in a single market. The FCC attributes interests held by, among others, an entity’s officers, directors, certain stockholders, and in some circumstances, lenders, to that entity for purposes of applying these ownership limitations. The new ownership rules may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in a swap transaction if the swap would cause the other company to violate these rules.

We may lose audience share and advertising revenue if we are unable to reach agreement with cable companies regarding the retransmission of signals of our television stations.

Many viewers of our television stations receive their signals via retransmissions by cable television systems. All television stations are generally entitled to be carried on cable television systems in their local markets without compensation from the cable system (“must-carry”). Alternatively, commercial television stations may choose to require cable television systems to obtain their permission (“retransmission consent”) to carry the signal of their station. In such cases, the terms of carriage, including compensation, are subject to negotiation between the station and the cable system. The decision as to whether a television station’s relationship with each local cable system will be governed by must-carry or by retransmission consent arrangements is binding for a three-year period.

On October 1, 2002, each of Fisher Broadcasting’s television stations sent notices to cable systems in their market electing must-carry or retransmission consent status for the period from January 1, 2003 through December 31, 2005. We elected retransmission consent status with respect to a number of key cable systems. We have granted temporary permission for such cable systems to continue to retransmit the signal of the station involved while a retransmission consent agreement is under negotiation. We have executed retransmission consent agreements with several major systems in the Seattle and Portland television markets granting major cable systems permission to carry our local analog television stations on those cable systems, but we are in continuing negotiations with other systems in the Seattle and Portland markets, as well as with cable systems in markets served by our other television stations. There is no assurance, however, that retransmission consent agreements can be negotiated successfully with any cable system. If we cannot reach agreement regarding the terms under which a station will be retransmitted by a cable system, the cable system will be prohibited by law from continuing to carry the signal of that station. This could have an adverse effect on the ability of the public to receive the signal of the affected station, ultimately resulting in reduced audience share and advertising revenue.

A write-down of goodwill to comply with new accounting standards would harm our operating results.

Approximately $38 million (excluding amounts classified as held for sale), or 8% of our total assets as of June 30, 2003, consists of unamortized goodwill. On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (FAS 142). FAS 142 changed the accounting for goodwill from an amortization method to an impairment-only approach. As a result of our adoption of FAS 142 we recorded a charge for impairment of goodwill amounting to $99 million before income tax benefit or $64 million after income taxes. Goodwill is to be tested at the reporting unit level annually or whenever events or circumstances occur indicating that goodwill might be impaired. If impairment is indicated as a result of future annual testing, we will be required to record an additional impairment charge when such impairment occurs.

Dependence on key personnel may expose us to additional risks.

Our business is dependent on the performance of certain key employees, including our chief executive officer and other executive officers. We also employ several on-air personalities who have significant loyal audiences in their respective markets. We can give no assurance that all such key personnel will remain with us. The loss of any key personnel could harm our operations and financial results.

The non-renewal or modification of affiliation agreements with major television networks could harm our operating results.

Our television stations’ affiliation with one of the four major television networks (ABC, CBS, NBC and FOX) has a significant impact on the composition of the stations’ programming, revenues, expenses and operations. We cannot give any assurance that we will be able to renew our affiliation agreements with the networks at all, or on satisfactory terms. In recent years, the networks have been attempting to change affiliation arrangements in manners that would disadvantage affiliates. The non-renewal or modification of any of the network affiliation agreements could harm our operating results.

A network might acquire a television station in one of our markets, which could harm our business and operating results.

If a network acquires a television station in a market in which we own a station affiliated with that network, the network will likely decline to renew the affiliation agreement for our station in that market, which could harm our business and results of operations.

Our operations may be adversely affected by power outages, severe weather, increased energy costs or earthquakes in the Pacific Northwest.

Our corporate headquarters and a significant portion of our operations are located in the Pacific Northwest. The Pacific Northwest has from time-to-time experienced earthquakes and experienced a significant earthquake on February 28, 2001. We do not know the ultimate impact on our operations of being located near major earthquake faults, but an earthquake could harm our operating results. Severe weather, such as high winds, can also damage our television and radio transmission towers, which could result in loss of transmission, and a corresponding loss of advertising revenue, for a significant period of time. In addition, the Pacific Northwest may experience power shortages or outages and increased energy costs. Power shortages or outages could cause disruptions to our operations, which in turn may result in a material decrease in our revenues and earnings and have a material adverse effect on our operating results. Power shortages or increased energy costs in the Northwest could harm the region’s economy, which could reduce our advertising revenues. Our insurance coverage may not be adequate to cover the losses and interruptions caused by earthquakes, severe weather and power outages.

Our computer systems are vulnerable to viruses and unauthorized tampering.

Despite our implementation of network security measures, our servers and computer systems are vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. Any of these events could cause system interruption, delays and loss of critical data. Our recovery planning may not be sufficient for all eventualities.

Our efforts to develop new business opportunities are subject to technological risk and may not be successful, or results may take longer than expected to realize.

We are developing new opportunities for creating, aggregating and distributing content through non-broadcast media channels, such as the Internet, cell phones, and web-enabled personal digital assistants. The success of our efforts is subject to technological innovations and risks beyond our control, so that the anticipated benefits may take longer than expected to realize. In addition, we have limited experience in non-broadcast media, which may result in errors in the conception, design or implementation of a strategy to take advantage of the opportunities available in that area. We therefore cannot give any assurance that our efforts will result in successful products or services.

Our ownership and operation of real property, including Fisher Plaza, is subject to risks, including those relating to the economic climate, local real estate conditions, potential inability to provide adequate management, maintenance and insurance, potential collection problems, reliance on significant tenants, and regulatory risks.

Revenue and operating income from our properties and the value of our properties may be adversely affected by the general economic climate, the local economic climate and local real estate conditions, including prospective tenants’ perceptions of attractiveness of the properties and the availability of space in other competing properties. We have developed the second building at Fisher Plaza, which entailed a significant investment. The softened economy in the Seattle area could adversely affect our ability to lease the space of our properties on attractive terms or at all, which could harm our operating results. In addition, a continuing of the severe downturn in the telecom and high-tech sectors may significantly affect our ability to attract tenants to Fisher Plaza, since space at Fisher Plaza is marketed in significant part to organizations from these sectors. Other risks relating to our real estate operations include the potential inability to provide adequate management, maintenance and insurance, and the potential inability to collect rent due to bankruptcy or insolvency of tenants or otherwise. One of our properties is leased to a tenant that occupies a substantial portion of the property and the departure of this tenant or its inability to pay their rents or other fees could have a significant adverse effect on our real estate revenues. Real estate income and values may also be adversely affected by such factors as applicable laws and regulations, including tax and environmental laws, interest rate levels and the availability of financing. We carry comprehensive liability, fire, extended coverage and rent loss insurance with respect to our properties. There are, however, certain losses that may be either uninsurable, not economically insurable or in excess of our current insurance coverage limits. If an uninsured loss occurs with respect to a property, it could harm our operating results.

A reduction on the periodic dividend on the common stock of SAFECO may adversely affect our revenue, cash flow and earnings.

We are a 2.2% stockholder of the common stock of SAFECO Corporation. If SAFECO reduces its periodic dividends, it will negatively affect our cash flow and earnings. In February 2001, SAFECO reduced its quarterly dividend from $0.37 to $0.185 per share.

Antitrust law and other regulatory considerations could prevent or delay our business activity or adversely affect our revenues.

The completion of any future transactions we may consider may be subject to the notification filing requirements, applicable waiting periods and possible review by the Department of Justice or the Federal Trade Commission under the Hart-Scott-Rodino Act. Any television or radio station acquisitions or dispositions will be subject to the license transfer approval process of the FCC. Review by the Department of Justice or the Federal Trade Commission may cause delays in completing transactions and, in some cases, result in attempts by these agencies to prevent completion of transactions or to negotiate modifications to the proposed terms. Review by the FCC, particularly review of concentration of market share, may also cause delays in completing transactions. Any delay, prohibition or modification could adversely affect the terms of a proposed transaction or could require us to abandon a transaction opportunity. In addition, campaign finance reform laws or regulations could result in a reduction in funds being spent on advertising in certain political races, which would adversely affect our revenues and results of operations in election years.

We may be required to make additional unanticipated investments in HDTV technology, which could harm our ability to fund other operations or lower our outstanding debt.

Although our Seattle, Portland, Eugene and Boise television stations currently comply with FCC rules requiring stations to broadcast in high definition television (HDTV), our stations in smaller markets do not because they are operating pursuant to Special Temporary Authority to utilize low power digital facilities. These Special Temporary Authorizations must be renewed every six months, and there is no assurance that the FCC will continue to extend those authorizations. If the FCC does not extend the authorizations for Fisher’s smaller stations, then we may be required to make substantial additional investments in digital broadcasting to maintain the licenses of our smaller market stations. This could result in less cash being available to fund other aspects of our business or decrease our debt load.

Health concerns relating to Severe Acute Respiratory Syndrome (SARS) could disrupt or depress economic activity, which could harm our results of operations.

Health concerns related to the spread of SARS could disrupt or depress economic activity, harm trade and result in a decrease in national and local advertising sales. Any decrease in television or radio advertising may harm our results of operations.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The market risk in our financial instruments represents the potential loss arising from adverse changes in financial rates. We are exposed to market risk in the areas of interest rates and securities prices. These exposures are directly related to our normal funding and investing activities.

Interest Rate Exposure

Our strategy in managing exposure to interest rate changes is to maintain a balance of fixed- and variable-rate instruments. We will also consider entering into interest rate swap agreements at such times as we deems appropriate. At June 30, 2003, the fair value of our fixed-rate debt is estimated to be approximately $1,000,000 greater than the carrying amount of $90,511,000. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10 percent change in interest rates and, at June 30, 2003, amounted to $1,589,000 on our fixed rate debt.

We also had $176,411,000 in variable-rate debt outstanding at June 30, 2003. A hypothetical 10 percent change in interest rates underlying these borrowings would result in a $996,000 annual change in our pre-tax earnings and cash flows.

We are a party to an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of our floating rate debt outstanding under an eight-year credit facility (“Broadcast Facility”). The notional amount of the swap reduces as payments are made on principal outstanding under the broadcast facility until termination of the contract on March 22, 2004. At June 30, 2003, the notional amount of the swap was $65,000,000 and the fair value of the swap agreement was a liability of $2,787,000. A hypothetical 10 percent change in interest rates would change the fair value of our swap agreement by approximately $33,000 at June 30, 2003. We have not designated the swap as a cash flow hedge; accordingly changes in the fair value of the swap are included in Net gain on derivative instruments in the accompanying Condensed Consolidated Statement of Operations.

Marketable Securities Exposure

The fair value of our investments in marketable securities at June 30, 2003 was $105,954,000. Marketable securities consist of 3,002,376 shares of SAFECO Corporation, which is reported on the NASDAQ securities market. As of June 30, 2003, these shares represented 2.2% of the outstanding common stock of SAFECO Corporation. While we currently do not intend to dispose of our investments in marketable securities, we have classified the investments as available-for-sale under applicable accounting standards. Mr. William W. Krippaehne, Jr., President, CEO, and a Director of the Company, is a Director of SAFECO Corporation. A hypothetical 10 percent change in market prices underlying these securities would result in a $10,595,000 change in the fair value of the marketable securities portfolio. Although changes in securities prices would affect the fair value of the marketable securities portfolio and cause unrealized gains or losses, such gains or losses would not be realized unless the investments are sold.

As of June 30, 2003, 3,000,000 shares of SAFECO Corporation stock owned by the Company were pledged as collateral under a variable forward sales transaction with a financial institution. A portion of the Forward Transaction is considered a derivative and, as such, we periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. As of June 30, 2003 the derivative portion of the Forward Transaction had a fair market value of $4,131,000, which is included in Other assets in the accompanying Condensed Consolidated Balance Sheet. A hypothetical 10 percent change in the market price of SAFECO Corporation stock would change the market value of the Forward Transaction by approximately $7,700,000. A hypothetical 10 percent change in volatility would change the market value of the Forward Transaction by approximately $250,000. A hypothetical 10 percent change in interest rates would change the market value of the Forward Transaction by approximately $410,000.

ITEM 4—CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the fiscal quarter covered by this report, these disclosure controls and procedures are effective in ensuring that the information that the Company is required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that the disclosure controls and procedures are effective in ensuring that the information required to be reported is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We have made no significant changes in internal controls over financial reporting during the last fiscal quarter that materially affected or are reasonably likely to materially affect our internal controls over financial reporting. We intend to continue to refine our internal controls on an ongoing basis as we deem appropriate with a view towards continuous improvements.

Management and PricewaterhouseCoopers LLP, our independent accountants, have reported to our Audit Committee certain matters involving internal controls that PricewaterhouseCoopers LLP considers to be reportable conditions under standards established by the American Institute of Certified Public Accountants. These matters relate to internal controls with respect to the identification of pension liability, the timing and recording of settlement losses and the classification of cash flows.

These matters have been discussed among management, PricewaterhouseCoopers LLP and our Audit Committee. We have assigned the highest priority to the correction of these reportable conditions and are committed to addressing them as soon as possible. We have recently hired additional corporate accounting staff and we intend to respond to the reportable conditions by hiring additional accounting staff.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are parties to various claims, legal actions and complaints in the ordinary course of their businesses. In the Company’s opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the consolidated financial position or results of operations of the Company.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders was held April 24, 2003.

The four nominees elected to the Board of Directors for three-year terms expiring in 2006 are listed below. There were no broker non-votes with respect to any of the nominees.

	Votes For	Votes Withheld
James W. Cannon	6,815,529	234,786
Phelps K. Fisher	5,795,797	1,254,518
Jacklyn F. Meurk	6,748,758	301,557
Jerry A. St. Dennis	6,895,463	154,852

Continuing as Directors are Carol H. Fratt, Donald G. Graham, Jr., Donald G. Graham, III, and William W. Krippaehne, Jr., whose terms expire in 2004, and Jean F. McTavish, George F Warren, and William W. Warren, Jr., whose terms expire in 2005. In August 2003, Ms. Meurk and Ms. McTavish announced their retirement from the Company’s Board of Directors.

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:


2.1		Asset Purchase Agreement dated as of May 29, 2003 Among Fisher Broadcasting Company, Fisher Broadcasting—Portland Radio, L.L.C., Entercom Portland, LLC, and Entercom Portland License, LLC.

10.1		Second Amendment To Credit Agreement, dated as of June 27, 2003, by and among Fisher Broadcasting Company, certain subsidiaries of Fisher Broadcasting Company, Wachovia Bank, National Association (successor to First Union National Bank), in its capacity as Administrative Agent, Bank Of America, N.A. and The Bank Of New York, as co-syndication agents, National City Bank, as documentation agent and certain lenders located on the signature page thereto.

31.1		Certification of Chief Executive Officer.

31.2		Certification of Chief Financial Officer.

32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:

A report on Form 8-K dated April 23, 2003 was filed with the Commission announcing first quarter operating results.

A report on Form 8-K dated April 25, 2003 was filed with the Commission announcing the results of its 2003 Annual Meeting of Shareholders, the retirement of Donald G. Graham, Jr., as Chairman of the Board of Directors and the elimination of certain executive officer positions as part of Fisher Communications’ ongoing restructuring process.

A report on Form 8-K dated May 29, 2003 was filed with the Commission announcing the signing of an agreement for the sale of the broadcasting subsidiary’s two Portland, Oregon radio stations.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FISHER COMMUNICATIONS, INC. (Registrant)

Dated September 12, 2003		/s/ DAVID D. HILLARD
		David D. Hillard Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description

2.1		Asset Purchase Agreement dated as of May 29, 2003 Among Fisher Broadcasting Company, Fisher Broadcasting—Portland Radio, L.L.C., Entercom Portland, LLC, and Entercom Portland License, LLC.

10.1		Second Amendment To Credit Agreement, dated as of June 27, 2003, by and among Fisher Broadcasting Company, certain subsidiaries of Fisher Broadcasting Company, Wachovia Bank, National Association (successor to First Union National Bank), in its capacity as Administrative Agent, Bank Of America, N.A. and The Bank Of New York, as co-syndication agents, National City Bank, as documentation agent and certain lenders located on the signature page thereto.

31.1		Certification of Chief Executive Officer.

31.2		Certification of Chief Financial Officer.

32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-2.1 3 dex21.htm ASSET PURCHASE AGREEMENT DATED AS OF MAY 29, 2003 Asset Purchase Agreement dated as of May 29, 2003

Exhibit 2.1

ASSET PURCHASE AGREEMENT

Dated as of May 29, 2003

Among

FISHER BROADCASTING COMPANY,

FISHER BROADCASTING – PORTLAND RADIO, L.L.C.,

ENTERCOM PORTLAND, LLC

and

ENTERCOM PORTLAND LICENSE, LLC

TABLE OF CONTENTS

		Page
ARTICLE 1. DEFINITIONS		1

Section 1.1	Definitions	1

ARTICLE 2. PURCHASE AND SALE OF PURCHASED ASSETS		8

Section 2.1	Purchase and Sale of Purchased Assets	8
Section 2.2	Excluded Assets	10
Section 2.3	Assumption of Liabilities	11
Section 2.4	Closing Date	14
Section 2.5	Earnest Money	14
Section 2.6	Purchase Price	15
Section 2.7	Payment of Purchase Price	15
Section 2.8	Closing Date Deliveries	15
Section 2.9	Further Assurances	17
Section 2.10	Allocation	17
Section 2.11	Prorations and Adjustments	18
Section 2.12	Collection of Accounts Receivable	19

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE FISHER ENTITIES		19

Section 3.1	Organization	19
Section 3.2	Authority of the Fisher Entities	20
Section 3.3	Financial Statements	21
Section 3.4	Operations Since Balance Sheet Date	21
Section 3.5	No Undisclosed Liabilities	23
Section 3.6	Taxes	23
Section 3.7	Sufficiency of Assets	23
Section 3.8	Governmental Permits	23
Section 3.9	FCC Licenses	24
Section 3.10	Real Property; Real Property Leases	25
Section 3.11	Personal Property	27
Section 3.12	Personal Property Leases	28
Section 3.13	Intellectual Property	28
Section 3.14	Title to Purchased Assets	29
Section 3.15	Employees	29
Section 3.16	Employee Relations	29
Section 3.17	Contracts	30
Section 3.18	Status of Contracts	32

Section 3.19	No Violation, Litigation or Regulatory Action	32
Section 3.20	Insurance	34
Section 3.21	Employee Plans; ERISA	34
Section 3.22	Environmental Protection	36
Section 3.23	Insolvency Proceedings	37
Section 3.24	Citizenship	37
Section 3.25	No Misleading Statements	37
Section 3.26	Transactions with Affiliates	37
Section 3.27	No Finder	37
Section 3.28	Accounts Receivable	37

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER		38

Section 4.1	Organization	38
Section 4.2	Authority of Buyer	38
Section 4.3	Litigation	39
Section 4.4	No Finder	39
Section 4.5	Qualifications as FCC Licensee	39
Section 4.6	Funds Available	39

ARTICLE 5. ACTION PRIOR TO THE CLOSING DATE		39

Section 5.1	Investigation of the Business	39
Section 5.2	Preserve Accuracy of Representations and Warranties	40
Section 5.3	FCC Consent; Other Consents and Approvals	40
Section 5.4	Operations of the Stations Prior to the Closing Date	41
Section 5.5	Third Party Consents	43
Section 5.6	Environmental Site Assessment	44
Section 5.7	Public Announcement	45
Section 5.8	Milestones	45
Section 5.9	Administrative Violations	46
Section 5.10	Acquisitions by Buyer	46
Section 5.11	Adverse Developments	46
Section 5.12	Additional Covenant	46
Section 5.13	No Solicitation Covenant	46
Section 5.14	Copies of FCC Applications	47
Section 5.15	Estoppel Certificates	47
Section 5.16	Trade Agreements	47
Section 5.17	Title Examination; Title Insurance; Surveys	47
Section 5.18	Access to Real Property	48
Section 5.19	Fisher Board Approval	48

ARTICLE 6. ADDITIONAL AGREEMENTS		48

Section 6.1	Taxes; Sales, Use and Transfer Taxes	48
Section 6.2	Employees; Employee Benefit Plans	49

Section 6.3	Control of Operations Prior to Closing Date	52
Section 6.4	Non-Solicitation of Employees	52
Section 6.5	Termination of Certain Arrangements	52
Section 6.6	Public Filings	52
Section 6.7	Bulk Sales Act	53

ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FISHER ENTITIES		53

Section 7.1	No Misrepresentation or Breach of Covenants and Warranties	53
Section 7.2	No Restraint or Litigation	54
Section 7.3	FCC Consent	54
Section 7.4	Payment	54
Section 7.5	Closing Documents	54

ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER		55

Section 8.1	No Misrepresentation or Breach of Covenants and Warranties	55
Section 8.2	No Restraint or Litigation	55
Section 8.3	FCC Consent	55
Section 8.4	FCC Licenses	56
Section 8.5	Closing Documents	56
Section 8.6	Third Party Consents	56
Section 8.7	Satisfactory Environmental Assessment	56
Section 8.8	Title Commitments	56
Section 8.9	Access Easements	56

ARTICLE 9. INDEMNIFICATION		57

Section 9.1	Indemnification by Fisher Entities	57
Section 9.2	Indemnification by Buyer	58
Section 9.3	Additional Indemnification Matters; Notice of Claims	58
Section 9.4	Third Person Claims	59
Section 9.5	Treatment of Indemnity Payments	60
Section 9.6	Limitations	61

ARTICLE 10. TERMINATION AND REMEDIES		61

Section 10.1	Termination	61
Section 10.2	Fisher Entities’ Remedies	63
Section 10.3	Buyer’s Remedies	63

ARTICLE 11. GENERAL PROVISIONS		64

Section 11.1	Survival of Representations, Warranties and Obligations	64
Section 11.2	Confidential Nature of Information	64
Section 11.3	Governing Law; Venue	65

iii

Section 11.4	Notices	65
Section 11.5	Assignment; Successors and Assigns	66
Section 11.6	Entire Agreement; Amendments	66
Section 11.7	Interpretation	66
Section 11.8	Waivers	66
Section 11.9	Expenses	67
Section 11.10	Partial Invalidity	67
Section 11.11	Execution in Counterparts	67
Section 11.12	Risk of Loss; Damage to Facilities	67
Section 11.13	No Third Party Beneficiaries	68
Section 11.14	Attorneys’ Fees	68
Section 11.15	Hiring of Employees	68
Section 11.16	Actions Pursuant to the TBA	68

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), is entered into as of May 29, 2003, by and among Fisher Broadcasting Company, a Washington corporation (“Fisher Broadcasting”), Fisher Broadcasting – Portland Radio, L.L.C., a Delaware limited liability company (“Fisher Radio” and together with Fisher Broadcasting, the “Fisher Entities”), Entercom Portland, LLC, a Delaware limited liability company (“Entercom Portland”), and Entercom Portland License, LLC, a Delaware limited liability company (“Entercom Portland License” and together with Entercom Portland, “Buyer”).

W I T N E S S E T H:

WHEREAS, The Fisher Entities are engaged in the business of owning and operating radio broadcast stations KWJJ-FM and KOTK(AM), licensed to Portland, Oregon (together, the “Stations”);

WHEREAS, Fisher Radio holds the broadcast licenses issued by the FCC and used in the operation of the Stations; and

WHEREAS, the Fisher Entities desire to sell to Buyer, and Buyer desires to purchase from the Fisher Entities, substantially all of the assets used or held for use in the operation of the Stations, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and with the intention of being legally bound, it is hereby agreed among the Fisher Entities and Buyer as follows:

ARTICLE 1.

DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms have the meanings specified or referred to in this Section 1.1:

“Access Easements” has the meaning specified in Section 5.18.

“Adjustment Time” has the meaning specified in Section 2.11.

“Administrative Violation” has the meaning specified in Section 5.9.

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person.

“APA Transferred Employees” has the meaning specified in Section 6.2(b).

“Appraisal Firm” has the meaning specified in Section 2.10.

“Asset Allocation” has the meaning specified in Section 2.10.

“Assumed Liabilities” has the meaning specified in Section 2.3(a).

“Balance Sheet Date” has the meaning specified in Section 3.3(a).

“Balance Sheets” has the meaning specified in Section 3.3(a).

“Barter Agreements” shall mean contracts for the sale of time on the Stations in exchange for programming.

“Business” has the meaning specified in Section 2.1.

“Buyer Ancillary Agreements” has the meaning specified in Section 4.2(a).

“Buyer” has the meaning specified in the introductory paragraph hereof.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., any amendments thereto, any successor statutes, and any regulations promulgated thereunder as of the date hereof and as of Closing.

“Claim Notice” has the meaning specified in Section 9.3(b).

“Closing Date Adjustments” has the meaning specified in Section 2.11(a).

“Closing Date” has the meaning specified in Section 2.4.

“Closing” has the meaning specified in Section 2.4.

“Code” means the Internal Revenue Code of 1986, as amended.

“Communications Act” means the Communications Act of 1934, as amended.

“Contaminant” means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, petroleum or petroleum-derived substance or waste, or any constituent of any such substance or waste.

“Covenantor” has the meaning specified in Section 6.4.

“Damaged Asset Cap” has the meaning specified in Section 11.12(a).

“Damaged Assets” has the meaning specified in Section 11.12(a).

“Deposit” has the meaning specified in Section 2.5.

“Employee Plans” has the meaning specified in Section 3.21(a).

“Encumbrance” means any lien, claim, charge, security interest, mortgage, pledge, easement, conditional sale or other title retention agreement, defect in title, covenant or other restrictions on transfer, assignment or use of any kind.

“Entercom AM Licenses” means the licenses issued by the FCC and held by Entercom to operate AM stations KSLM(AM), KKSN(AM) and KFXX(AM).

“Entercom FM Licenses” means the licenses issued by the FCC and held by Entercom to operate AM stations KKSN(FM), KRSK(FM), KGON(FM) and KNRK(FM).

“Environmental Assessment” has the meaning specified in Section 5.6.

“Environmental Conditions” means the state of the environment, including natural resources (e.g. flora and fauna), soil, surface water, ground water, any drinking water supply, subsurface strata or ambient air.

“Environmental Laws” means all applicable federal, state and local laws, all applicable rules, written guidelines, and regulations promulgated thereunder, and all applicable orders, consent decrees, judgments, governmental notices, permits and governmental demand letters issued, promulgated or entered pursuant thereto, relating to pollution or protection of the environment (including, without limitation, ambient air, surface water, ground water, land surface, or subsurface strata), including, without limitation, (i) laws relating to emissions, discharges, releases or threatened releases of Hazardous Materials into the environment and (ii) laws relating to the identification, generation, manufacture, processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of Hazardous Materials that are in effect as of the date hereof and as of the Closing. Environmental Laws shall include, without limitation, CERCLA, as amended, RCRA, as amended, the Toxic Substances Control Act, as amended, the Hazardous Materials Transportation Act, as amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Occupational Safety and Health Act, as amended, and all analogous laws promulgated or issued by any Governmental Body that are enacted and in effect as of the date hereof and as of the Closing.

“Environmental Reports” means any and all written analyses, summaries or explanations relating to (i) any Environmental Conditions in, on or about the Real Property or (ii) Fisher Entities’ compliance with, or liability under, any Environmental Laws.

“ERISA Affiliate” means any person which is (or at any relevant time was) a member of a controlled group of corporations within the meaning of Code Section 414(b), any trade or business which is under common control within the meaning of Code Section 414(c), and any affiliated service group, within the meaning of Code Section 414(m) or (o), of which either Fisher Entity is (or at any relevant time was) a member.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Agent” has the meaning specified in Section 2.5.

“Escrow Agreement” has the meaning specified in Section 2.5.

“Excluded Assets” has the meaning specified in Section 2.2.

“Excluded Liabilities” has the meaning specified in Section 2.3(b).

“Expense” means any and all expenses reasonably incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).

“FAA” means the Federal Aviation Administration.

“FCC Consent” means action by the FCC granting its consent to the assignment to Buyer (or Affiliates of Buyer if assigned as permitted pursuant to Section 11.5) of the FCC Licenses as contemplated by this Agreement pursuant to appropriate applications filed by the parties with the FCC, subject to administrative or judicial reconsideration or review.

“FCC Licenses” has the meaning specified in Section 3.9(a).

“FCC” means the Federal Communications Commission.

“Final Order” means an order or action of the FCC that, by reason of expiration of time or exhaustion of remedies, is no longer subject to administrative or judicial reconsideration or review.

“Fisher Ancillary Agreements” has the meaning specified in Section 3.2(a).

“Fisher Board Approval” has the meaning specified in Section 3.2(a).

“Governmental Body” means any foreign, federal, state, local or other governmental authority or regulatory body.

“Governmental Permits” has the meaning specified in Section 3.8.

“Hazardous Materials” means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic, infectious, radioactive or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws but excluding materials occurring naturally at or about any facility. By way of example only, the term Hazardous Materials includes petroleum, urea formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides, herbicides, asbestos, acids, metals, solvents and waste waters.

“Indemnified Party” has the meaning specified in Section 9.3.

“Indemnitor” has the meaning specified in Section 9.3.

“Intellectual Property” has the meaning specified in Section 3.13(a).

“IRS” means the Internal Revenue Service.

“Knowledge of the Fisher Entities” has the following meaning: the Fisher Entities will be deemed to have “Knowledge” of a particular fact or other matter if (a) the President of Fisher Broadcasting, the General Manager of the Stations or the Chief Engineer of the Stations has actual knowledge of such fact or other matter, or if any of the foregoing individuals could reasonably be expected to discover or otherwise become aware of such fact or other matter in the course of making a reasonable inquiry into such areas of the Business that are under such individual’s general area of responsibility, or (b) the Business Manager (if and to the extent the position of Business Manager is filled at the time of execution hereof or at the time of Closing) of the Stations has actual knowledge of such fact or other matter.

“Identified Environmental Conditions” has the meaning specified in Section 5.6.

“Liability” means any and all claims, debts, liabilities, obligations and commitments of any nature whatsoever, whether known or unknown, asserted or unasserted, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to become due, whenever or however arising (including those arising out of any contract or tort, whether based on negligence, strict liability or otherwise) and whether or not the same would be required by generally accepted accounting principles to be reflected as a liability in financial statements or disclosed in the notes thereto.

“Liquidated Damages Amount” shall have the meaning specified in Section 10.2(a).

“Loss” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.

“Material Adverse Effect” means a material adverse effect on the business, operations, or financial condition of the Stations, the Business, the Purchased Assets, or on the ability of the Fisher Entities to consummate the transactions contemplated hereby, or any event or condition which would reasonably be expected, with the passage of time, to constitute such a “material adverse effect,” other than changes generally applicable to the economy or the radio broadcasting industry in general.

“Material Station Agreements” has the meaning specified in Section 5.5.

“Negative Trade Balance” has the meaning specified in Section 5.16(b).

“Owned Towers” has the meaning specified in Section 3.9(d).

“Payment Date” has the meaning specified in Section 2.11.

“Permitted Encumbrance” means (a) a lien for Taxes, assessments or other governmental charges which are not yet due and payable, (b) a lien for mechanic’s, materialmen’s and similar encumbrances with respect to any amounts not yet due and payable, and (c) a lien securing payments under the Personal Property Leases set forth in Schedule 3.12.

“Person” means any person, employee, individual, corporation, limited liability company, partnership, trust, or any other non-governmental entity or any governmental or regulatory authority or body.

“Personal Property Leases” has the meaning specified in Section 3.12.

“Personal Property” has the meaning specified in Section 3.11.

“Pre-Closing Straddle Period” means the portion of any Straddle Period that ends on the Closing Date.

“Proposed Acquisition Transaction” has the meaning specified in Section 5.13.

“Purchase Price” has the meaning specified in Section 2.6.

“Purchased Assets” has the meaning specified in Section 2.1.

“Public Filings” has the meaning specified in Section 6.6.

“RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and any successor statute, and any regulations promulgated thereunder as of the date hereof and as of Closing.

“Real Property Leases” has the meaning specified in Section 3.10(d).

“Real Property” has the meaning specified in Section 3.10(a).

“Receivable” has the meaning specified in Section 2.12.

“Regulatory Termination Fee” shall have the meaning specified in Section 10.2(b).

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or property.

“Required Consent” has the meaning specified in Section 8.6.

“Requirements of Law” means any foreign, federal, state or local law, rule or regulation, Governmental Permit or other binding determination of any Governmental Body.

“Schedule 3.16 Contract” has the meaning specified in Section 6.2(a).

“Schedule 9.1(ix) Contracts” means the contracts set forth on Schedule 9.1(ix).

“Specified Event” has the meaning specified in Section 11.12(b).

“Station Agreements” has the meaning specified in Section 3.18(a).

“Station Licenses” has the meaning specified in Section 2.1(a).

“Station” has the meaning specified in the first recital hereof.

“Station Trust Application” has the meaning specified in Section 5.8(b).

“Straddle Period” means any taxable period that begins before and ends after the Closing Date.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Tax” or “Taxes” means any federal, state, local or foreign, net or gross income, gross receipts, sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, personal property, real property, capital stock, profits, social security (or similar), unemployment, disability, registration, value added, estimated, alternative or add-on minimum taxes, customs duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Body.

“TBA” means the Time Brokerage Agreement to be executed and delivered by the Fisher Entities and Buyer contemporaneously with the execution and delivery of this Agreement.

“TBA Effective Date” means the effective date of the TBA as defined in Section 2.2 of the TBA.

“TBA Transferred Employees” has the meaning specified in Section 6.2(a).

“Time Sales Agreements” shall mean contracts for the sale of time on the Stations for cash.

“Title Commitments” has the meaning specified in Section 5.17(b).

“Title Defect” has the meaning specified in Section 5.17(a).

“Trade Agreements” shall mean contracts for the sale of time on the Stations in exchange for merchandise or services used or useful for the benefit of the Stations, excluding Barter Agreements.

“Transfer Application” has the meaning specified in Section 5.3(a).

“Transfer Opposition” has the meaning specified in Section 8.3.

“Transfer Restraint” means any of the following: (a) any objection, opposition or other filing that is made raising issues concerning the Transfer Application that is based on Buyer’s qualifications as the licensee of the Stations due to a change in the FCC’s radio multiple ownership rules relating to the definition of radio markets that makes the acquisition of the Stations by the Buyer impermissible due to Buyer’s proposed station ownership; (b) the Transfer Application being designated for hearing by the FCC if such designation for hearing is based on Buyer’s qualifications as the licensee of the Stations due to a change in the FCC’s radio multiple ownership rules relating to the definition of radio markets that makes the acquisition of the Stations by the Buyer impermissible due to Buyer’s proposed station ownership; or (c) the FCC Consent not being granted because of Buyer’s qualifications as the licensee of the Stations due to a change in the FCC’s radio multiple ownership rules relating to the definition of radio markets that makes the acquisition of the Stations by the Buyer impermissible due to Buyer’s proposed station ownership.

ARTICLE 2.

PURCHASE AND SALE OF PURCHASED ASSETS

Section 2.1 Purchase and Sale of Purchased Assets. Upon the terms and subject to the conditions of this Agreement, on the Closing Date, the Fisher Entities shall sell, transfer, assign, convey, and deliver to Buyer, and Buyer shall purchase from the Fisher Entities, free and clear of all Encumbrances (except for Permitted Encumbrances), all of the assets, properties, and business (excepting only the Excluded Assets) of every kind and description, wherever located, real, personal or mixed, tangible or intangible, used, held for use, or otherwise relating to the Stations or the business of the Stations (the “Business”) (herein collectively referred to as the “Purchased Assets”), including, without limitation, all right, title and interest of the Fisher Entities in, to and under:

(a) All licenses, permits, permissions and other authorizations relating to the operation of the Stations issued by the FCC or any other governmental agency, including but not limited to those listed on Schedules 3.8 and 3.9(a) (the “Station Licenses”), all rights to use of the Stations’ call letters, and all applications for modification, extension or renewal of the Station Licenses, and any pending applications for any new licenses, permits, permissions or authorizations pending on the Closing Date, including, but not limited to, those listed on Schedule 3.9(a);

(b) All accounts receivable generated by the Business for periods commencing on the TBA Effective Date and continuing as long as the TBA is in effect and receivables due to the Stations pursuant to the Trade Agreements, but excluding any amounts payable by Buyer to the Fisher Entities in accordance with the TBA.

(c) The Real Property described in Schedule 3.10(a) and any option, right or contract to purchase, lease, possess or occupy real property described in Schedule 3.10(d);

(d) All machinery, equipment (including computers and office equipment), auxiliary and translator facilities, transmitting towers, transmitters, broadcast equipment, antennae, supplies, inventory (including all programs, records, tapes, recordings, compact discs,

cassettes, spare parts and equipment), advertising and promotional materials, engineering plans, records and data, vehicles, furniture and other personal property owned by the Fisher Entities, which is used in the Stations or the Business, including, without limitation, the items listed or referred to in Schedule 3.11(a), but excluding any such property disposed of by the Fisher Entities or Buyer between the date hereof and the Closing Date in accordance with the terms of this Agreement and the TBA;

(e) The Personal Property Leases and the personal property leased thereunder listed in Schedule 3.12;

(f) The trademarks, trade names, service marks, and copyrights (and all goodwill associated therewith), registered or unregistered, owned by the Fisher Entities, relating to the Stations or the Business, any applications for registration thereof, any patents and applications therefor, and any licenses or other rights of the Fisher Entities relating to any of the foregoing or to any intellectual property of any third party, including, without limitation, the items listed in Schedule 3.13(a);

(g) (i) All Time Sales Agreements made in the ordinary course of the Business and consistent with past practice, (ii) the contracts, agreements or understandings set forth on Schedule 3.17(a) and designated on such Schedule as an “Assumed Contract,” and (iii) any other contract, agreement or understanding (evidenced in writing) entered into by the Fisher Entities in respect of the Business that (A) is of the nature described in subsection (ii), (iii) or (vi) of Section 3.17(b) but which, by virtue of its specific terms, is not required to be listed in Schedule 3.17(a); (B) is entered into after the date hereof consistent with the provisions of Sections 5.4 and 5.16 of this Agreement or by or at the direction of Buyer in accordance with the provisions of the TBA; or (C) Buyer specifically agrees to assume;

(h) All advertising customer lists, mailing lists, processes, trade secrets, know-how and other proprietary or confidential information used in or relating to the Business, the Purchased Assets or the Stations;

(i) All rights, claims or causes of action of the Fisher Entities against third parties arising under warranties from manufacturers, vendors and others in connection with the Purchased Assets, the Stations or the Business;

(j) All prepaid rentals and other prepaid expenses (except for prepaid insurance) arising from payments made by the Fisher Entities in connection with the operation of the Business prior to the Closing Date for goods or services;

(k) All jingles, slogans, commercials and other promotional materials used in or relating to the Stations or the Business;

(l) Licensee’s rights to all computer programs used primarily in connection with the operation of the Business, the Purchased Assets or the Stations for the three years before the TBA Effective Date, copies of all records relating to Taxes that pertain to the Stations or the Purchased Assets, copies of monthly financial reports and such detailed records as Buyer reasonably requests, all as relating to Fisher Radio and the assets, properties, business and

operations of the Business, the Purchased Assets, or the Stations including, without limitation, all files, logs, programming information and studies, technical information and engineering data, news and advertising studies or consulting reports and sales correspondence, but excluding any books and records (including computer programs) relating to a business of the Fisher Entities unrelated to the Business, the Purchased Assets, or the Stations or otherwise described in Section 2.2; and

(m) Subject to the other provisions of this Agreement, all other assets or properties not referred to above which are reflected on the April 30, 2003 Balance Sheets of the Stations or acquired by the Fisher Entities for use by the Stations or in connection with the operation of the Business in the ordinary course of the Business after the Balance Sheet Date but prior to Closing, except (i) any such assets or properties disposed of after the Balance Sheet Date in the ordinary course of the Business consistent with the terms of this Agreement and the TBA, and (ii) Excluded Assets.

Section 2.2 Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include the following (herein referred to as the “Excluded Assets”):

(a) All cash and cash equivalents (including any marketable securities or certificates of deposit) of the Fisher Entities;

(b) All claims, rights and interests of the Fisher Entities in and to any refunds for Taxes paid in respect of the Stations or the Business for periods ending on or prior to the Closing Date (subject to claims of Buyer for proration of property and other Taxes or fees of any nature whatsoever under this Agreement and the TBA);

(c) Any rights, claims or causes of action of the Fisher Entities against third parties relating to the assets, properties, business or operations of the Business, the Purchased Assets or the Stations, to the extent they relate to the period prior to the Closing;

(d) All bonds, letters of credit, intercompany notes and similar items, contracts or policies of insurance and prepaid insurance with respect to such contracts or policies;

(e) Each Fisher Entity’s corporate seal, corporate minute books, stock record books, corporate records relating to incorporation and capitalization, financial accounting records (except as provided in Section 2.1(l)), Tax Returns and related documents and supporting work papers and any other records and returns relating to Taxes, assessments and similar governmental levies (other than real and personal property Taxes, assessments and levies imposed on the Purchased Assets);

(f) (i) The contracts, agreements or understandings of the Fisher Entities which are not listed on Schedule 3.17(a) that otherwise would be required to be listed thereon if such contracts, agreements or understandings were to be assigned to Buyer hereunder, (ii) the contracts, agreements or understandings of the Fisher Entities listed in Schedule 3.17(a) and not designated on such Schedule as an “Assumed Contract,” and (iii) any contract, agreement or

understanding either listed on Schedule 3.17(a) or not required to be listed thereon which has expired prior to the Closing Date;

(g) Any trade name, trademarks, service marks or logos using or incorporating the phrases “Fisher” or “Fisher Broadcasting” or any portion of any logo containing such phrases;

(h) All records and documents relating to Excluded Assets or to liabilities other than Assumed Liabilities and not relating to the Business, the Purchased Assets, the Stations or the Assumed Liabilities;

(i) All trusts, trust assets, trust accounts, reserves, insurance policies, or other assets, including, but not limited to, those listed in Schedule 3.21 relating to employees or to funding the employee benefit plans, agreements or arrangements sponsored, maintained, contributed to, or administered by the Fisher Entities;

(j) Any rights of, or payment due to, the Fisher Entities under or pursuant to this Agreement, the TBA or the other agreements with Buyer contemplated hereby;

(k) All accounts receivable arising out of the operation of the Business for periods prior to the TBA Effective Date;

(l) The Fisher Entities’ intranet service and related connections;

(m) The real property owned by Fisher Radio at N.E. Rocky Butte Road in Portland, Oregon, and at Elderberry Road near Seaside, Oregon, as more fully described on Schedule 2.2;

(n) All accounting and human resources software (PeopleSoft) used or licensed by the Fisher Entities prior to the Closing Date;

(o) The assets and properties described on Schedule 2.2.

Section 2.3 Assumption of Liabilities.

(a) Upon the terms and subject to the conditions of this Agreement, on the Closing Date, Buyer shall deliver to the Fisher Entities an undertaking and assumption, in a form reasonably acceptable to the Fisher Entities, pursuant to which Buyer shall assume and be obligated for, and shall agree to pay, perform and discharge in accordance with their terms, the following obligations and liabilities of the Fisher Entities (except to the extent such obligations and liabilities constitute Excluded Liabilities):

(i) All liabilities and obligations under Environmental Laws related to, associated with or arising out of (in each case provided that any condition giving rise to such liability or obligation did not exist prior to the Closing and excluding all liabilities and obligations arising out of or caused by the Fisher Entities’ actions prior to the Closing) (A) the occupancy, operation, use or control

of any of the Real Property after the Closing or (B) the operation of the Business by Buyer after the Closing, including, without limitation, any Release or storage of any Hazardous Materials on, at or from (1) any such real property (including, without limitation, all facilities, improvements, structures and equipment thereon, surface water thereon or adjacent thereto and soil or groundwater thereunder) or any conditions whatsoever on, under or in such real property or (2) any real property or facility owned by a third party at which Hazardous Materials generated by the Business were sent after the Closing;

(ii) All liabilities and obligations that accrue after the Closing under the Governmental Permits, Station Licenses, Real Property Leases, Personal Property Leases, Station Agreements, and the other Purchased Assets assigned to and assumed by Buyer at Closing; and

(iii) All liabilities and obligations that arise with respect to events occurring after the Closing relating to the operation of the Stations, the Business and ownership of the Purchased Assets by Buyer.

All of the foregoing to be assumed by Buyer hereunder are referred to herein as the “Assumed Liabilities.”

(b) Buyer shall not assume or be obligated for any, and the Fisher Entities shall solely retain, pay, perform, defend and discharge all, liabilities or obligations of any and every kind whatsoever, direct or indirect, known or unknown, absolute or contingent, not expressly assumed by Buyer under Section 2.3(a) or under the TBA and, notwithstanding anything to the contrary in Section 2.3(a), including, without limitation the following (herein referred to as “Excluded Liabilities”):

(i) All liabilities and obligations arising or relating to events prior to the Closing in connection with the operation of the Stations, the Business and the ownership of the Purchased Assets;

(ii) Any Taxes which arise from the operation of the Stations, the Business or the ownership of the Purchased Assets for periods or portions of periods that end on or prior to the Adjustment Time, other than any such liabilities and obligations for Taxes in respect of which, and only to the extent that, an adjustment is made to the Purchase Price in favor of Buyer pursuant to Section 2.11, which are included in the Assumed Liabilities;

(iii) Any liability or obligation in respect of indebtedness for borrowed money or any intercompany payable of the Fisher Entities or any of their Affiliates;

(iv) Except to the extent caused by the negligent acts or omissions of Buyer, all liabilities and obligations under Environmental Laws related to, associated with or arising out of (A) the occupancy, operation, use or control of any of the Real Property at any time or by any party prior to the Closing or (B) the

operation of the Business prior to the Closing, including, without limitation, any Release or storage of any Hazardous Materials prior to the Closing on, at or from (1) any such real property (including, without limitation, all facilities, improvements, structures and equipment thereon, surface water thereon or adjacent thereto and soil or groundwater thereunder) or any conditions whatsoever on, under or in such real property or (2) any real property or facility owned by a third party at which Hazardous Materials generated by the Business were sent prior to the Closing;

(v) Any liabilities or obligations, whenever arising (i) related to, associated with or arising out of (A) any pension, profit sharing, retirement, health and welfare employee benefit plan or other employee benefit plan, program or arrangement of the Fisher Entities providing any of the benefits described in 3(1) or 3(2) of ERISA, (B) any collective bargaining agreement (including without limitation item 1 on Schedule 3.16); and (C) any agreement, arrangement, or practice, whether written or oral, for employment, consulting, severance, vacation, retirement, post-retirement, bonus, stay bonus, deferred compensation, cash- or stock-based, incentive compensation, stock ownership, stock options, stock appreciation rights, stock purchase rights, phantom stock rights, insurance, worker’s compensation, disability, unemployment, medical, or other benefit, including any agreement, arrangement, or practice relating to accrued salary, payroll and wages, overtime rates, accrued sick pay, accrued comp. time, accrued vacation, and the proper classification of individuals providing services to the Fisher Entities or the Stations as independent contractors or employees, as the case may be; and (ii) relating to any current, former or retired employees, including but not limited to those plans, programs or arrangements listed in Schedule 3.21, the obligation to provide continuation coverage as defined in Section 4980B of the Code (“COBRA Coverage”) to any employee of the Fisher Entities or any of their Affiliates arising prior to or as of Closing, the obligation to provide notice or payment in lieu of notice or any applicable penalties under the Workers Adjustment and Retaining Notification Act or any similar state or local law, any claim of an unfair labor practice, any claim under any state unemployment compensation or worker’s compensation law or regulation or under any federal or state employment discrimination law or regulation;

(vi) Any costs and expenses incurred by the Fisher Entities incident to the negotiation and preparation of this Agreement or the TBA and the Fisher Entities’ performance and compliance with the agreements and conditions contained herein or therein;

(vii) Any of the Fisher Entities’ liabilities or obligations under this Agreement, the TBA or any of the Fisher Ancillary Agreements;

(viii) Any liabilities or obligations to be paid or performed after the Closing in connection with the operation of the Stations, the Business and the ownership of the Purchased Assets, to the extent such liabilities and obligations,

but for a breach or default, would have been paid, performed or otherwise discharged prior to the Closing or to the extent the same arise out of any such breach or default (unless such breach or default is caused by Buyer’s action or failure to perform as required by the TBA);

(ix) Any liabilities or obligations relating to the Excluded Assets;

(x) Any liabilities or obligations arising out of or relating to the employment of employees or independent contractors of the Stations or the Business through the Closing, including, without limitation, accrued salary, payroll and wages, accrued sick pay, accrued commissions, accrued “comp” time, accrued vacation time, and the proper classification of individuals providing services to the Fisher Entities as independent contractors or as employees, as the case may be;

(xi) Any obligations or liabilities relating to or arising out of any claims, litigation proceedings or Administrative Violations to the extent relating to actions of the Fisher Entities or the conduct of the Business on or prior to the Closing;

(xii) Any obligations or liabilities relating to or arising out of the employment and/or termination of employees employed at the Stations or in connection with the Business through the Closing; and

(xiii) Any obligations or liabilities arising out of or in connection with any contracts not assumed by Buyer under this Agreement or the TBA.

Section 2.4 Closing Date. The purchase and sale of the Purchased Assets provided for in Section 2.1 (the “Closing”) shall be consummated at 10:00 A.M., local time, on a date agreed upon by the Fisher Entities and Buyer, occurring within ten (10) business days after the conditions set forth in Articles 7 and 8 are satisfied or, if permissible, waived (disregarding for this purpose any such conditions to be satisfied by actions to be taken at the Closing), or such other date as may be agreed upon by the Fisher Entities and Buyer, at the offices of Graham & Dunn PC, Pier 70, 2801 Alaskan Way, Suite 300, Seattle, WA 98121, or at such other place or time or in such other manner as shall be agreed upon by the Fisher Entities and Buyer (the actual day on which the Closing occurs being hereinafter called the “Closing Date”); provided, however, that in no event shall the Closing take place any earlier than the third (3^rd) business day after the expiration of any cure period that has commenced after the giving of written notice of a breach of any representation or warranty as provided in Section 10.1(a). The Fisher Entities and Buyer shall use reasonable efforts to effect Closing by means of facsimile and overnight delivery services.

Section 2.5 Earnest Money. Within 24 hours following the execution and delivery of this Agreement, Buyer shall deliver to Allfirst Bank (the “Escrow Agent”) Two Million Two Hundred Thousand Dollars ($2,200,000) (the “Deposit”), to be held in accordance with an escrow agreement to be executed contemporaneously with this Agreement, by and among the Fisher Entities, Buyer and the Escrow Agent (the “Escrow Agreement”), in a form

reasonably acceptable to the parties thereto. The Deposit shall be held and disbursed in accordance with the terms of the Escrow Agreement and the provisions of this Section 2.5.

(a) At the Closing, the Fisher Entities and Buyer shall jointly instruct the Escrow Agent to deliver the Deposit held by the Escrow Agent pursuant to the Escrow Agreement to Buyer.

(b) If this Agreement is terminated by Buyer pursuant to Sections 10.1(a)(i), (iii), (iv)(a), (v), (vi), (vii) (and Section 2.5(d) does not apply), (ix) or (xi) or by the Fisher Entities pursuant to Section 10.1(a)(iv)(b), Section 10.1(a)(vii) (and Section 2.5(d) does not apply), or Section 10.1(a)(viii), (ix) or (x), the Fisher Entities and Buyer shall jointly instruct the Escrow Agent to return the Deposit held by the Escrow Agent pursuant to the Escrow Agreement to Buyer.

(c) (1) If this Agreement is terminated by the Fisher Entities pursuant to Sections 10.1(a)(ii) or if the Closing has not occurred because of a material breach by Buyer and the conditions set forth in Sections 8.3, 8.4, 8.6 and 8.7 have been satisfied, and the Fisher Entities are not then in material breach of this Agreement, then the Fisher Entities and Buyer shall jointly instruct the Escrow Agent to deliver the Deposit held by the Escrow Agent pursuant to the Escrow Agreement to the Fisher Entities.

(d) If this Agreement is terminated pursuant to Section 10.1(a)(vii) and the FCC Consent has not been granted due a change in the FCC’s radio multiple ownership rules relating to the definition of radio markets that makes Buyer’s station ownership contemplated by this Agreement impermissible due its proposed station ownership, then in accordance with Section 10.2(b), the Fisher Entities and Buyer shall jointly instruct the Escrow Agent to deduct the Regulatory Termination Fee from the Deposit held by the Escrow Agent pursuant to the Escrow Agreement and deliver it to the Fisher Entities, and to deliver the remaining balance of the Deposit held by the Escrow Agent pursuant to the Escrow Agreement to Buyer.

Section 2.6 Purchase Price. The purchase price for the Purchased Assets shall be equal to Forty-Four Million Dollars ($44,000,000), as adjusted pursuant to Sections 2.11, 5.6 and 11.12 (the “Purchase Price”).

Section 2.7 Payment of Purchase Price. The Purchase Price shall be paid at the Closing by bank wire transfer of immediately available funds to such bank account or accounts designated by the Fisher Entities for such purpose not less than three (3) business days before the Closing.

Section 2.8 Closing Date Deliveries.

(a) On the Closing Date, the Fisher Entities shall execute and deliver or cause to be delivered to Buyer:

(i) a bill of sale and assignments, in a form reasonably acceptable to Buyer, conveying all of the Purchased Assets,

(ii) a statutory warranty deed conveying to Buyer the owned Real Property described in Schedule 3.10(a),

(iii) all of the documents and instruments required to be delivered by the Fisher Entities pursuant to Article 8,

(iv) a certificate of good standing for each Fisher Entity, issued as of a recent date by the Secretary of State of each Fisher Entity’s state of formation and the Secretary of State of Oregon;

(v) a certificate of the secretary or assistant secretary or manager of each Fisher Entity certifying the resolutions of its members or directors, as the case may be, authorizing the execution and delivery of this Agreement and the transactions contemplated hereby and the incumbency and signatures of each officer executing this Agreement and any Fisher Ancillary Agreement,

(vi) the opinions of Fisher Entities’ legal and communications counsel in form and substance reasonably acceptable to Buyer, provided that, in any event, such opinions shall permit the reliance thereon by Buyer’s senior lenders.

(vii) a certification of non-foreign status from Fisher Radio, in form and substance reasonably satisfactory to Buyer, in accordance with Treas. Reg. § 1.1445-2(b),

(viii) such documents and instruments as may be reasonably requested by Buyer necessary to evidence that the Purchased Assets at Closing are free and clear of all Encumbrances other than Permitted Encumbrances, and

(ix) the books and records included in the Purchased Assets (provided that delivery of the foregoing will be deemed made to the extent such books and records are then located at any of the offices or premises included in the Purchased Assets).

(b) On the Closing Date, Buyer shall deliver or cause to be delivered to the Fisher Entities the Purchase Price, payable in the manner described in Section 2.7, and execute and deliver (i) all of the documents and instruments required to be delivered by the Buyer pursuant to Article 7, (ii) copies of the certificate of formation of each entity constituting Buyer, certified as of a recent date by the secretary of state of the state of its formation, (iii) a certificate of good standing of each entity constituting Buyer, each issued as of a recent date by the secretary of state of the state of its formation, (iv) a certificate of the secretary or assistant secretary of each entity constituting Buyer certifying the resolutions of its members or directors, as the case may be, authorizing the execution and delivery of this Agreement and the transactions contemplated hereby and the incumbency and signatures of its officers executing this Agreement and any Buyer Ancillary Agreement, (v) the undertaking and assumption described in Section 2.3(a), and (vi) an opinion of Buyer’s legal counsel, dated as of the Closing Date, in form and substance reasonably acceptable to the Fisher Entities.

Section 2.9 Further Assurances.

(a) On the Closing Date, the Fisher Entities shall (i) deliver to Buyer such other bills of sale, endorsements, assignments and other good and sufficient instruments of conveyance and transfer as Buyer may reasonably request or as may be otherwise reasonably necessary to vest in Buyer all the right, title and interest of the Fisher Entities in, to or under any or all of the Purchased Assets in accordance with this Agreement and (ii) take all steps as may be reasonably necessary to put Buyer in actual possession and control of all the Purchased Assets. From time to time following the Closing, the Fisher Entities shall execute and deliver, or cause to be executed and delivered, to Buyer such other instruments of conveyance and transfer as Buyer may reasonably request or as may be otherwise necessary to more effectively convey and transfer to, and vest in, Buyer and put Buyer in possession of, any part of the Purchased Assets in accordance with this Agreement. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any license, certificate, approval, authorization, agreement, contract, lease, easement or other commitment included in the Purchased Assets if an attempted assignment thereof without the consent of a third party thereto would constitute a breach thereof.

(b) On the Closing Date, Buyer shall deliver to the Fisher Entities such other undertakings and assumptions and other good and sufficient instruments of conveyance, transfer and assumption as the Fisher Entities may reasonably request or as may be otherwise reasonably necessary to evidence Buyer’s assumption of and obligation to pay, perform and discharge the Assumed Liabilities. From time to time following the Closing, Buyer shall execute and deliver, or cause to be executed and delivered, to the Fisher Entities such other undertakings and assumptions as the Fisher Entities may reasonably request or as may be otherwise necessary to more effectively evidence Buyer’s assumption of and obligation to pay, perform and discharge the Assumed Liabilities.

Section 2.10 Allocation. The Purchase Price shall be allocated among the Purchased Assets as provided in this Section 2.10 (the “Asset Allocation”). The Fisher Entities and Buyer shall use good faith efforts to agree upon, prior to Closing, an allocation of the balance of the Purchase Price among the Purchased Assets which, if agreed upon within sixty (60) days after the date hereof, will be incorporated in a schedule to be executed by the parties prior to or at Closing. Buyer shall deliver its proposed Asset Allocation to the Fisher Entities within thirty (30) days after the date hereof. If the Fisher Entities and Buyer are unable to so agree, the Fisher Entities and Buyer shall then promptly retain Bond & Pecaro (the “Appraisal Firm”) to appraise the classes of the Purchased Assets. The Appraisal Firm shall be instructed to perform an appraisal of the classes of Purchased Assets and to deliver a report to the Fisher Entities and Buyer as soon as reasonably practicable. Buyer and the Fisher Entities shall bear equally the fees, costs and expenses of the Appraisal Firm. Each party shall prepare IRS Form 8594 allocating the Purchase Price, as required by Section 1060 of the Code, in accordance with the Asset Allocation. Buyer and each of the Fisher Entities shall file with their respective Federal income tax return for the tax year in which the Closing occurs, IRS Form 8594 containing the information agreed upon by the parties pursuant to the immediately preceding sentence. Buyer agrees to report the purchase of the Purchased Assets, and the Fisher Entities agree to report the sale of the Purchased Assets on their respective Tax Returns in a manner

consistent with the information agreed upon by the parties pursuant to this Section 2.10 and contained in their respective IRS Forms 8594. Notwithstanding anything to the contrary in this Agreement, the provisions of this Section 2.10 shall survive the Closing for the full period of any applicable statute of limitations plus sixty (60) days.

Section 2.11 Prorations and Adjustments.

(a) Subject to the provisions contained in the TBA, all income and normal operating expenses arising from the conduct of the Business and operation of the Stations, including, without limitation, assumed liabilities and prepaid expenses, Taxes, and assessments (but excluding Taxes arising by reason of the sale of the Purchased Assets hereunder, which shall be paid as set forth in Section 6.1(e)), power and utilities charges, and rents and similar prepaid and deferred items shall be prorated between the Fisher Entities and Buyer in accordance with generally accepted accounting principles to reflect the principle that the Fisher Entities shall be entitled to all income and be responsible for all expenses arising from the conduct of the Business and operation of the Stations through 11:59 p.m. on the Closing Date (the “Adjustment Time”) and Buyer shall be entitled to all income and be responsible for all expenses arising from the conduct of the Business and operation of the Stations after the Adjustment Time. Subject to the provisions contained in the TBA, all special assessments and similar charges or liens imposed against the Purchased Assets in respect of any period of time through the Adjustment Time, whether payable in installments or otherwise, shall be the responsibility of the Fisher Entities, and amounts with respect to such special assessments, charges or liens in respect of any period of time after the Adjustment Time shall be the responsibility of Buyer, and such charges shall be adjusted as required hereunder. The prorations and adjustments to be made pursuant to this Section 2.11(a) are referred to as the “Closing Date Adjustments.” Three (3) days prior to the Closing Date, the Fisher Entities shall estimate all Closing Date Adjustments pursuant to this Section 2.11(a) and shall deliver a statement of their estimates to Buyer (which statement shall set forth in reasonable detail the basis for those estimates). At the Closing, the net amount due to the Buyer or the Fisher Entities as a result of the estimated Closing Date Adjustments (excluding any item that is in good faith dispute) shall be applied as an adjustment to the Purchase Price as appropriate. Within sixty (60) days after the Closing, Buyer shall deliver to the Fisher Entities a statement of any adjustments to Buyer’s estimate of the Closing Date Adjustments, and no later than the close of business on the 20th day after the delivery to the Fisher Entities of Buyer’s statement (the “Payment Date”), Buyer shall pay to the Fisher Entities, or the Fisher Entities shall pay to Buyer, as the case may be, any amount due as a result of the adjustment (or, if there is any good faith dispute, the undisputed amount). In the event that such reduction does not equal the total amount due to Buyer under this Section (or, if there is any good faith dispute, the undisputed amount), the Fisher Entities shall pay the remainder in accordance herewith. Except with respect to items that the Fisher Entities notify Buyer that they object to prior to the close of business on the Payment Date, the adjustments set forth in Buyer’s statement shall be final and binding on the parties effective at the close of business on the Payment Date. If the Fisher Entities dispute Buyer’s determinations, the parties shall confer with regard to the matter and an appropriate adjustment and payment shall be made as agreed upon by the parties within thirty (30) business days after such agreement (or, if they are unable to resolve the matter, they shall select a recognized firm of independent certified public accountants agreed to by Buyer and the Fisher Entities (“Accounting Firm”) to resolve the matter, whose decision on the matter shall be

binding and whose fees and expenses shall be borne equally by the parties, and an appropriate adjustment and payment shall be made based on the resolution by the Accounting Firm within thirty (30) business days after such resolution). If the amount of Taxes that are to be prorated pursuant to this Section 2.11(a) is not known by sixty (60) days after the Closing Date, then the amount of such Taxes shall be estimated as of such date and once the amount of such Taxes is known, Buyer shall pay to the Fisher Entities, or the Fisher Entities shall pay to Buyer, as the case may be, the net amount due as a result of the actual apportionment of such Taxes.

(b) Schedule 2.11(b) contains the Fisher Entities’ regularly prepared Trade Accounts Receivable Reports as of May 22, 2003 for the Stations. Each Report includes the amount of the net Trade Payable or Trade Receivable, as the case may be, for each advertiser for that market as of May 22, 2003. “Trade Payable” means, as of any date of determination, the amount by which, if any, the aggregate value of time owed under the Trade Agreements in respect of which the determination is being made exceeds the aggregate value of goods and services to be received under such Trade Agreements, and “Trade Receivable” means, as of any date of determination, the amount by which, if any, the aggregate value of goods and services to be received pursuant to the Trade Agreements in respect of which the determination is being made exceeds the aggregate value of time owed under such Trade Agreements. Three (3) business days before the Closing Date, the Fisher Entities shall deliver to Buyer Trade Accounts Receivable Reports for the Stations estimating the Trade Payable or Trade Receivable, as the case may be, for each advertiser for each of the Stations as of the Closing Date (the “Closing Date Trade Report”).

Section 2.12 Collection of Accounts Receivable. Buyer agrees to collect, as the Fisher Entities’ agent, all accounts receivable arising out of the operation of the Business in accordance with the provisions of the TBA.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES

THE FISHER ENTITIES

As an inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Fisher Entities jointly and severally make the following representations and warranties to Buyer, all of which shall be true, correct, and complete as of the date hereof and as of the Closing, except as otherwise specifically provided:

Section 3.1 Organization. Fisher Broadcasting is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington. Fisher Radio is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Fisher Entities are duly qualified as a foreign corporation or limited liability company, as the case may be, to do business in, and are in good standing under, the laws of the State of Oregon. The Fisher Entities have the requisite corporate power and authority or limited liability power and authority, as the case may be, to own or lease and to operate the Stations, to use the Purchased Assets in the operation of the Stations, and to carry on the Business as conducted by them.

Section 3.2 Authority of the Fisher Entities.

(a) Subject to the approval by the board of directors of Fisher Communications, Inc. of the transactions contemplated by this Agreement and all of the other agreements, including the TBA, and instruments to be executed and delivered by such Fisher Entity pursuant hereto (collectively, the “Fisher Ancillary Agreements”) (the “Fisher Board Approval”), each Fisher Entity will have the requisite corporate power and authority or limited liability power and authority, as the case may be, to execute and deliver this Agreement and the Fisher Ancillary Agreements, to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof.

(b) Subject to the Fisher Board Approval, the execution, delivery and performance of this Agreement and the Fisher Ancillary Agreements by each Fisher Entity will be duly authorized and approved by all necessary action of the Fisher Entities and will not require any further authorization or consent of the Fisher Entities or any of their stockholders, members or Affiliates. Upon the Fisher Board Approval, this Agreement and the TBA and Fisher Ancillary Agreements, when executed and delivered by the Fisher Entities, will be a legal, valid and binding agreement of the Fisher Entities enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(c) Except as set forth in Schedule 3.2(c) and subject to the Fisher Board Approval, none of the execution, delivery and performance by either of the Fisher Entities of this Agreement, the TBA or the Fisher Ancillary Agreements, or the consummation by either of the Fisher Entities of any of the transactions contemplated hereby or thereby or compliance by either of the Fisher Entities with or fulfillment by either of the Fisher Entities of the terms, conditions and provisions hereof or thereof will:

(i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance upon any of the Purchased Assets under, the organizational documents of either Fisher Entity, any Station Agreement, any Governmental Permit or any judgment, order, award or decree to which either Fisher Entity is a party or any of the Purchased Assets, the Stations or the Business is subject or by which either Fisher Entity is bound, or any statute, other law or regulatory provision affecting either Fisher Entity or the Purchased Assets, the Stations or the Business; or

(ii) require the approval, consent, authorization or act of, or the making by either of the Fisher Entities of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or

regulatory authority or body, except for such of the foregoing as are necessary pursuant to the Communications Act and the rules and regulations of the FCC.

Section 3.3 Financial Statements.

(a) Schedule 3.3 contains true and correct copies of the unaudited balance sheets (the “Balance Sheets”) of Fisher Radio as of April 30, 2003 (the “Balance Sheet Date”) and December 31, 2002, respectively, and the related statements of income for the twelve (12) months then ended.

(b) Such balance sheets and statements of income (i) have been prepared from and are in accordance in all material respects with the books and records regularly maintained by the Fisher Entities, and (ii) have been prepared in accordance with generally accepted accounting principles consistently applied and present fairly and accurately, in all material respects, the financial position and results of operations of the Stations and the Business as of their respective dates and for the respective periods covered thereby (except for the omission of footnotes and changes resulting from normal year-end adjustments).

(c) Except as reflected in such balance sheets and statements of income, no event has occurred since the Balance Sheet Date that would make either such balance sheets or such statements of income misleading in any material respect for the respective periods covered thereby.

(d) The books of account and other records of Fisher Radio from which such balance sheets and statements of income were prepared accurately and fairly reflect, in all material respects, in reasonable detail, the activities of Fisher Radio for the respective periods covered thereby and have been made available to Buyer for its inspection.

Section 3.4 Operations Since Balance Sheet Date.

(a) Except as set forth in Schedule 3.4(a), during the period from the Balance Sheet Date to the date hereof, inclusive, there has been:

(i) no fact, event, change or effect having, or which may reasonably be expected to have, a Material Adverse Effect;

(ii) no damage, destruction, loss or claim (whether or not covered by insurance) or condemnation or other taking which materially adversely affects the Purchased Assets, the Stations or the Business; and

(iii) no adverse change in relations with employees, directors or officers which has had or would reasonably be expected to have a Material Adverse Effect.

(b) Except as set forth in Schedule 3.4(b), since the Balance Sheet Date, the operations of the Stations and the Business have been conducted only in the ordinary course consistent with past practice. Without limiting the generality of the foregoing, since the Balance

Sheet Date, except as set forth in such Schedule 3.4(b) the Fisher Entities have not, in respect of the Purchased Assets, the Stations or the Business:

(i) sold, leased, transferred or otherwise disposed of (including any transfers to any Affiliate of the Fisher Entities), or mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance (other than Permitted Encumbrances) on, any of the Purchased Assets, other than personal property having a value, in the aggregate, of less than $10,000 sold or otherwise disposed of for fair value or consumed in the ordinary course of the Business consistent with past practice;

(ii) canceled without fair consideration therefor any debts owed to or claims held by the Fisher Entities relating to the Stations (including the settlement of any claims or litigation) or waived any right of significant value to the Fisher Entities relating to the Purchased Assets, the Stations or the Business, other than in the ordinary course of the Business consistent with past practice;

(iii) created, incurred, guaranteed or assumed, or agreed to create, incur, guarantee or assume, any indebtedness for borrowed money except in the ordinary course of the Business, and borrowings under existing credit arrangements either that do not affect the Purchased Assets or the Business or that will be repaid prior to or as of the Closing;

(iv) entered into any capitalized leases;

(v) delayed payment of any account payable or other liability of the Business beyond its due date or the date when such liability would have been paid in the ordinary course of the Business consistent with past practice;

(vi) granted or instituted any increase in any manner any rate of salary or compensation or adopted, modified, terminated, contributed to or amended to increase benefits of any profit sharing, bonus, incentive, severance pay or termination pay, deferred compensation, group insurance, pension, retirement, medical, hospital, disability, welfare or other employee benefit plan, trust, fund or similar arrangement or commit itself to amend any of such plans, funds or similar arrangements, other than in the ordinary course of the Business consistent with past practices;

(vii) failed to maintain all Employee Plans in accordance with applicable law and regulations;

(viii) made any loan to, or entered into any transaction with any of their directors, officers and employees;

(ix) changed the accounting methods, principles, or practices materially affecting the Purchased Assets, the Stations or the Business, except insofar as may

have been required by law or by a change in generally accepted accounting principles; or

(x) entered into any agreement or made any commitment to take any action described in subparagraphs (i) through (x) above.

Section 3.5 No Undisclosed Liabilities. Except as set forth in Schedule 3.5 and in the Balance Sheets, the Fisher Entities are not subject, with respect to the Purchased Assets, the Stations or the Business, to any liability, whether absolute, contingent, accrued or otherwise, that is required by generally accepted accounting principles to be reflected or reserved against in such Balance Sheets that are not fully reflected or reserved against in such Balance Sheets.

Section 3.6 Taxes. Except as set forth on Schedule 3.6:

(a) The Fisher Entities have (i) duly filed all Tax Returns required to be filed in respect of the Stations, (ii) paid in full or discharged all Taxes owed by the Fisher Entities relating to the Purchased Assets (whether or not such Taxes are shown as due on any Tax Return), excepting such Taxes as will not be due until after the Closing Date and that are to be prorated between Buyer and the Fisher Entities pursuant to Section 2.11 of the Agreement and (iii) paid in full or discharged all Taxes the non-payment of which could result in an Encumbrance on the Purchased Assets in the hands of the Buyer, excepting such Taxes as will not be due until after the Closing Date and which are to be prorated pursuant to Section 2.11 of this Agreement.

(b) None of the Purchased Assets (i) are required to be treated as being owned by any other person pursuant to the so-called safe harbor lease provisions of former section 168(f)(8) of the Code, (ii) secures any debt the interest on which is tax-exempt under section 103(a) of the Code, (iii) are tax-exempt use property within the meaning of section 168(h) of the Code or (iv) are subject to a 467 rental agreement as defined in section 467 of the Code.

Section 3.7 Sufficiency of Assets. Except as set forth in Schedule 3.7, the Purchased Assets constitute all of the material assets necessary for and used in the conduct of the Business and the operation of the Stations as currently conducted by the Fisher Entities.

Section 3.8 Governmental Permits. The Fisher Entities own, hold or possess all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from a Governmental Body (other than the FCC Licenses) that are necessary to entitle the Fisher Entities to own or lease, operate and use their assets and to carry on and conduct the Business substantially as conducted immediately prior to the date of this Agreement, except for such Governmental Permits as to which the failure to so own, hold or possess would not have a Material Adverse Effect (herein collectively called “Governmental Permits”). Schedule 3.8 sets forth a list and brief description of each such Governmental Permit held by the Fisher Entities as of the date of this Agreement. Except as set forth in Schedule 3.8, the Fisher Entities have fulfilled and performed in all material respects their obligations under each of the Governmental Permits, and no event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a material breach or material default under any

such Governmental Permit. No notice of cancellation, of default or of any dispute concerning any such Governmental Permit, or of any event, condition or state of facts described in the preceding sentence, has been received by the Fisher Entities. Except as set forth in Schedule 3.8, each such Governmental Permit is valid, subsisting and in full force and effect (subject to expiration or termination in accordance with its terms), and may be assigned and transferred to the Buyer in accordance with this Agreement and at the time of assignment or transfer of control to the Buyer will be in full force and effect, in each case without (i) the occurrence of any breach, default or forfeiture of rights thereunder or (ii) the consent, approval or act of, or the making of any filing with, any Governmental Body or other party.

Section 3.9 FCC Licenses.

(a) Set forth on Schedule 3.9(a) is a list of the Station Licenses issued by the FCC to Fisher Radio for the operation of the Stations and all applications for modification, extension or renewal thereof, and any applications for any new licenses, permits, permissions or authorizations pending on the date hereof (the “FCC Licenses”).

(b) The FCC Licenses are all of the licenses, permits, and other authorizations issued by the FCC used or necessary to lawfully operate the Stations in the manner and to the full extent as they are now operated, and the FCC Licenses are validly issued in the name of Fisher Radio. The Fisher Entities have delivered to Buyer true and complete copies of the FCC Licenses, including any and all amendments and other modifications thereto. Except as set forth on Schedule 3.9(b), the FCC Licenses are in full force and effect, are valid for the balance of the current license term applicable generally to radio stations licensed to communities in the state where the Stations are located, and are unimpaired by any acts or omissions of either Fisher Entity or any of their Affiliates, or the employees, agents, officers, directors or shareholders of either Fisher Entity, and are free and clear of any restrictions which might limit the full operation of the Stations in the manner and to the full extent that they are now operated (other than restrictions under the terms of the FCC Licenses themselves or generally applicable under the rules and regulations of the FCC). Except as set forth on Schedule 3.9(b), the Fisher Entities have not received any notice of any violations of the FCC Licenses, the Communications Act or the rules and regulations thereunder that remain pending and unresolved. Except as set forth on Schedule 3.9(b), there is no action by or before the FCC currently pending or, to the Knowledge of the Fisher Entities, threatened, to revoke, cancel, rescind, modify or refuse to renew in the ordinary course any of the FCC Licenses. Except as set forth on Schedule 3.9(b), there are no applications or proceedings pending at the FCC or, to the Knowledge of the Fisher Entities, threatened, to which the Fisher Entities are a party or that are directed at the Fisher Entities, the Business or the Stations, that may have a material adverse effect on the Business, the Purchased Assets or the operation of the Stations (other than those generally applicable to the broadcast industry). Except as set forth on Schedule 3.9(b), (i) to the Knowledge of the Fisher Entities, there are no formal written complaints regarding the Fisher Entities pending at the FCC or threatened that may have a material adverse effect on the Business, the Purchased Assets or the operation of the Stations, and (ii) based solely on the Fisher Entities’ inquiry with the FCC initiated on May 20, 2003 and completed on May 29, 2003, there are no formal written complaints regarding the Fisher Entities pending at the FCC or threatened that may have a

material adverse effect on the Business, the Purchased Assets or the operation of the Stations. Fisher Entities do not have Knowledge of any facts or circumstances reasonably likely to result in those of the FCC Licenses subject to expiration not being renewed in the ordinary course for a full term without material qualifications or of any reason reasonably likely to result in any of the FCC Licenses being revoked. The Stations are in compliance with the FCC’s policy on human exposure to radio frequency radiation. No renewal of any FCC License would constitute a major environmental action under the rules and regulations of the FCC in existence as of the date of this Agreement. To the Knowledge of the Fisher Entities, except as set forth on Schedule 3.9(b), there are no facts pertaining to the Stations, either Fisher Entity, their Affiliates or any other persons or entities affiliated therewith, which, under the Communications Act or the existing rules and regulations of the FCC, would (i) disqualify the Fisher Entities from assigning the FCC Licenses (excluding any applications that by their terms cannot be assigned) to Buyer or from consummating the transactions contemplated herein, or (ii) materially delay the obtaining of the approvals required for the transactions contemplated herein. The Fisher Entities maintain an appropriate public inspection file at the studios of the Stations in accordance with FCC rules and regulations.

(c) All information contained in any applications for modification, extension or renewal of the FCC Licenses, and any pending applications for any new licenses, permits, permissions or authorizations relating to the Stations pending on the Closing Date, including, but not limited to, those listed on Schedule 3.11(a), was true, complete and accurate in all material respects when filed and was updated to the extent required by the Communications Act and the rules and regulations of the FCC as circumstances may have changed during the pendency thereof.

(d) Except as disclosed on Schedule 3.9(b), Schedule 3.9(d) contains a list of the antenna registration numbers for each tower owned by the Fisher Entities as of the date of this Agreement that requires registration under the rules and regulations of the FCC and that is included in the Purchased Assets (such towers the “Owned Towers”).

Section 3.10 Real Property; Real Property Leases.

(a) Schedule 3.10(a) contains a brief description of all real property owned or leased (and an indication of whether such property is owned or leased) by the Fisher Entities in connection with the operation of the Stations as of the date of this Agreement, as they are now operated, and each option held by the Fisher Entities to acquire any real property (the “Real Property”).

(b) No real property other than that listed on Schedule 3.10(a) is used in, held for use in connection with, or necessary for the conduct of the Business or operation of the Stations as they are now operated (other than easements, rights of access, and the like included in the Purchased Assets). The Fisher Entities have marketable fee simple title (free and clear of any Encumbrances other than Permitted Encumbrances) to the owned Real Property.

(c) Except as disclosed in Schedule 3.10(c): To the Knowledge of the Fisher Entities, there are no encroachments upon the owned Real Property by any buildings, structures,

or improvements located on adjoining real estate. To the Knowledge of the Fisher Entities, none of the buildings, structures, or improvements (including without limitation any ground radials, guy wires or guy anchors) constructed on the owned Real Property encroaches upon adjoining real estate. To the Knowledge of the Fisher Entities, all such buildings, structures, and improvements are constructed in conformity with or are “grandfathered” with respect to all “setback” lines, easements, and other restrictions, or rights of record, or that have been established by any applicable building or safety code or zoning ordinances. To the Knowledge of the Fisher Entities, such “grandfathered” approvals shall survive the transfer of the owned Real Property to Buyer. To the Knowledge of the Fisher Entities, no utility lines serving the Real Property necessary for the operation of the Stations as currently conducted pass over the lands of others except where appropriate easements have been obtained. To the Knowledge of the Fisher Entities, no guy wires supporting any towers necessary for the operation of the Stations as currently conducted pass over the lands of others except where appropriate easements have been obtained. To the Knowledge of the Fisher Entities, neither the whole nor any part of any Real Property, is subject to any pending or threatened suit for condemnation or other taking by any public authority. There exists no writ, injunction, decree, order or judgment, nor any litigation, pending, or, to the Knowledge of the Fisher Entities, threatened, relating to the Fisher Entities’ use, lease, occupancy or operation of any of the Real Property. To the Knowledge of the Fisher Entities, the Fisher Entities’ use and occupancy of the Real Property comply with all regulations, codes, ordinances, and statutes of all applicable governmental authorities, including without limitation all environmental protection and sanitary laws and regulations, occupational safety and health regulations, and electrical codes, provided, that the representations and warranties regarding compliance made in the preceding clause do not modify any other representations or warranties of the Fisher Entities in this Agreement regarding compliance. To the Knowledge of the Fisher Entities, there are no material structural defects in the buildings, structures, and improvements located on the owned Real Property, roofs on the owned Real Property are in satisfactory condition and repair (subject to normal wear and tear), and all plumbing equipment, heating, ventilating and air conditioning equipment, electrical wiring, and water and sewage systems on the owned Real Property are operating satisfactorily and are free of any material defects. The tower used in connection with the KOTK(AM) Station and owned by the Fisher Entities and, to the Knowledge of the Fisher Entities, the tower used in connection with KWJJ-FM, can structurally support all of the equipment necessary for the operation of such Stations as currently conducted in accordance with law, governmental approvals, and sound engineering practices. To the Knowledge of the Fisher Entities, all owned Real Property has legal and insurable access from a public roadway for vehicles and by foot.

(d) Schedule 3.10(d) sets forth a list of each lease or similar agreement under which either Fisher Entity is lessee of, or holds or operates, any Real Property owned by any third Person as of the date of this Agreement, which are the sole and complete agreements concerning the Fisher Entities’ use of the leased premises (the “Real Property Leases”). Each Real Property Lease is legal, valid, binding, enforceable and in full force and effect (subject to expiration or termination in accordance with their terms). Neither of the Fisher Entities, nor to the Knowledge of the Fisher Entities, any other party, is in default, violation or breach in any material respect under any Real Property Lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would (i) constitute a default, violation or breach by the Fisher Entities in any material respect thereunder, or (ii) to the Knowledge of

the Fisher Entities, constitute a default, violation or breach by any other party in any material respect thereunder. No amount payable under any Real Property Lease is past due (other than amounts being contested in good faith through appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles consistently applied on the balance sheets and statements of income of the Fisher Entities). The Fisher Entities have not received any notice of a default, offset or counterclaim under any Real Property Lease or any other communication asserting any material non-compliance with any Real Property Lease. Subject to matters that constitute Permitted Encumbrances, the Fisher Entities have the exclusive right to use and occupy that portion of the premises leased under each Real Property Lease. The Fisher Entities enjoy peaceful and undisturbed possession of that portion of the premises leased by the Fisher Entities under the Real Property Leases. Except as set forth on Schedule 3.10(d), the Fisher Entities’ interests under the Real Property Leases are free and clear of all Encumbrances other than Permitted Encumbrances. The Fisher Entities have delivered to Buyer, true and complete copies of the Real Property Leases, together, in the case of any subleases or similar occupancy agreements, with copies of all other leases. Except as disclosed in Schedule 3.2(c) or Schedule 3.10(d), the Fisher Entities have full legal power and authority to assign their rights under the Real Property Leases to Buyer in accordance with this Agreement on terms and conditions no less favorable in any material respect (with respect to the Real Property Leases individually or in the aggregate) than those contained in the Real Property Leases on the date hereof (as the Leases may be modified prior to the Closing in accordance with the provisions of this Agreement and the TBA), and such assignment will not affect the validity, enforceability and continuity of any such lease.

(e) All utilities that are required for the use of the Real Property for the purposes for which such properties are presently being used by the Fisher Entities, including, without limitation, electric, water, sewer, telephone and similar services, have been connected and, to the Knowledge of the Fisher Entities, are in satisfactory working order (subject to normal wear and tear). By the Closing Date, the Fisher Entities will have paid all charges for such utilities, including, without limitation, any “tie-in” charges or connection fees, except for those charges that will not become due until after the Closing Date and that are to be prorated between the Fisher Entities and Buyer pursuant to Section 2.11.

Section 3.11 Personal Property.

(a) Schedule 3.11(a) contains a list of all machinery, equipment, vehicles, furniture and other personal property owned or leased by Fisher Entity having an original cost of $2,500 or more, relating to the Business, or used or held for use in, or necessary for, the operation of the Stations (the “Personal Property”).

(b) Except as set forth on Schedule 3.11(a), the Personal Property required to be listed on Schedule 3.11(a) is in satisfactory operating condition and repair (reasonable wear and tear excepted), is in conformity with FCC regulations, is maintained in accordance with good engineering practice, is performing satisfactorily, is not in need of repair, has been properly maintained in accordance with the manufacturers’ recommendations and industry practices, is available for immediate use and is otherwise sufficient to permit the Stations to operate in

accordance with the FCC Licenses and the rules and regulations of the FCC in all material respects.

Section 3.12 Personal Property Leases. Schedule 3.12 contains a list of each lease or other agreement or right under which either Fisher Entity is lessee of, or holds or operates, any Personal Property owned by a third party and relating to the Business, or used or held for use in, or necessary for, the operation of the Stations as of the date of this Agreement, except those which are terminable by the Fisher Entities without penalty on 30 days’ notice or less or which provide for annual rentals less than $5,000 (the “Personal Property Leases”).

Section 3.13 Intellectual Property.

(a) Schedule 3.13(a) contains a list of (i) all call signs, United States and foreign patents, pending patent applications, trademark registrations, pending trademark applications, trade names, service marks, copyrights, logos, domain names, and other similar intangible property rights (including licensee rights in third-party software), issued to, licensed to, assigned to, filed by, or used to promote or identify the Stations, or otherwise used in connection with the Business by the Fisher Entities, and (ii) all agreements, contracts and understandings therefor, (excluding in each case the Excluded Assets) (the “Intellectual Property”).

(b) Except as disclosed in Schedule 3.13(b), the Fisher Entities either: (i) own the entire right, title and interest in and to the Intellectual Property listed in Schedule 3.13(a), free and clear of Encumbrances except for Permitted Encumbrances; or (ii) have the valid right and license to use the Intellectual Property in the conduct of the Business and the operation of the Stations.

(c) Except as disclosed in Schedule 3.13(c), (i) all patents and registrations identified in Schedule 3.13(a) are in force, and all applications identified in Schedule 3.13(a) are pending without challenge (other than office actions that may be pending before the Patent and Trademark Office or its foreign equivalents); (ii) the Intellectual Property owned by and, to the Knowledge of the Fisher Entities, the Intellectual Property that is licensed to, the Fisher Entities and material to the conduct of the Business, is valid and enforceable; and (iii) the Fisher Entities have the right to bring actions for infringement or unauthorized use of the Intellectual Property owned by or exclusively licensed to the Fisher Entities and material to the conduct of the Business.

(d) Except as disclosed in Schedule 3.13(d), (i) no written claim, nor to the Knowledge of the Fisher Entities any oral claim, has been made or asserted that alleges the Intellectual Property owned or licensed by the Fisher Entities and material to the conduct of the Business infringes the intellectual property of another Person; (ii) no litigation, arbitration or other proceeding is currently pending with respect to the Intellectual Property owned or licensed by the Fisher Entities; and (iii) no written claim, nor to the Knowledge of the Fisher Entities any oral claim, has been made or asserted that challenges the validity or ownership of any Intellectual Property owned or licensed by the Fisher Entities and material to the conduct of the Business.

(e) The use of the Intellectual Property as now used in the operation of the Stations does not infringe any copyright, patent, trademark, trade name, service mark, or other similar right of any third party. The Fisher Entities have not sold, licensed or otherwise disposed of any of the Intellectual Property to any person or entity and the Fisher Entities have not agreed to indemnify any person or entity for any patent, trademark or copyright infringement related to the operation of the Stations.

Section 3.14 Title to Purchased Assets. Except as disclosed on Schedule 3.14, the Fisher Entities have good and marketable title to all of the Purchased Assets (or a valid leasehold or license interest, in the case of any leased or licensed assets, as applicable), free and clear of all Encumbrances, except for Permitted Encumbrances. At Closing, the Fisher Entities shall convey to Buyer good and marketable title to the Purchased Assets (or a valid leasehold or license interest, in the case of any leased or licensed assets, as applicable), free and clear of all Encumbrances, except for Permitted Encumbrances.

Section 3.15 Employees

(a) Schedule 3.15 contains a true and accurate list setting forth: (i) the names of all individuals currently employed by Fisher Radio (whether active or on leave of absence) in connection with the Business as of the date hereof; (ii) the titles and positions of such employees; (iii) the salary or other compensation payable to each employee as of May 15, 2003; (iv) the location of employment of each employee, (v) the type of employment of each employee (i.e., full-time or part-time), and (vi) the employment status of each employee (i.e., active or on specified leave by type).

(b) The Fisher Entities (i) have not, since the Balance Sheet Date, except as disclosed on Schedule 3.15 and consistent as to timing and amount with past practices, increased the compensation payable to or to become payable to or for the benefit of any of their employees (other than normal annual salary increases consistent with past practice), and (ii) has properly classified individuals providing services to the Fisher Entities relating to the Business as employees or independent contractors of the Fisher Entities.

(c) To the Knowledge of the Fisher Entities, no executive, key employee or group of employees has any plans to terminate employment with the Stations.

Section 3.16 Employee Relations.

(a) Except as set forth on Schedule 3.16, the Fisher Entities are not a party to any (i) labor collective bargaining union or similar agreement or (ii) any employment, loan, loan guaranty, consulting, non-compete, severance, retention, compensation, deferred compensation, stock or cash based incentive or other similar agreement, arrangement, commitment or understanding (whether written or oral) with salaried or non-salaried employees in each case in connection with the Business or any of the Stations.

(b) Except as set forth in Schedule 3.16, and except as provided by law, the employment of all persons presently employed or retained by the Fisher Entities or the Stations is terminable at will.

(c) Except as set forth on Schedule 3.16, (i) no union or similar organization represents employees of any of the Business or the Stations, no union has been certified to represent the Fisher Entities or the Stations, and, to the Knowledge of the Fisher Entities, no such organization is attempting to organize such employees; (ii) except as set forth in Schedule 3.16, neither the Fisher Entities nor any of the Stations have engaged in any unfair labor practice and there are no complaints against the Fisher Entities or either of the Stations pending before the National Relations Board or any similar state or local labor agency by or on behalf of any employee of the Fisher Entities or either of the Stations; (iii) there is no pending or threatened strike, slowdown, picket, work stoppage, or arbitration proceedings involving labor matters or other labor disputes affecting the Business or the Stations; and (iv) neither of the Fisher Entities nor any of their subsidiaries have experienced any attempt by organized labor to cause the Fisher Entities or the Stations to comply with or conform to demands of organized labor, strike, work stoppage or other significant labor difficulties of any nature at the Stations in the past two (2) years.

(d) Except as set forth in Schedule 3.16, the Fisher Entities and their subsidiaries are and have been in compliance in all material respects with all state and federal laws, ordinances, rules, regulations and requirements relating to labor and employment laws, immigration laws, any employment tax or withholding obligations, any obligations arising under a collective bargaining agreement or any obligations arising under employee benefit plans in each case with respect to the Business or any of the Stations.

(e) The Fisher Entities and the Stations have paid in full to all employees all amounts currently due and payable for wages, salaries, commissions, bonuses, benefits and other compensation.

Section 3.17 Contracts.

(a) Set forth in Schedule 3.17(a) is a list of each contract, agreement, lease or other agreement relating to the Business, the operation of the Stations or the Purchased Assets to which either Fisher Entity is a party as of the date of this Agreement, except for Time Sales Agreements, Barter Agreements, Trade Agreements, contracts that relate solely to Excluded Assets, contracts that are designated as Excluded Assets in Section 2.2 or Schedule 2.2, and contracts that could impose an obligation or liability on Buyer of less than $5,000 individually and less than $25,000 in the aggregate. Schedule 3.17(a) also indicates whether each contract, agreement or other instrument listed therein is to be deemed an “Assumed Contract,” a “Contract Not Assumed,” and/or a Material Station Agreement for purposes of this Agreement.

(b) Except as set forth on Schedule 3.17(a), except for contracts that are designated as Excluded Assets in Section 2.2 or Schedule 2.2 and except for contracts entered into after the date of this Agreement consistent with the provisions of this Agreement or with the provisions of the TBA, as of the date of this Agreement, neither Fisher Entity is a party to or bound by:

(i) Any contract in respect of the Business or any of the Stations for the future lease, purchase or sale of real property;

(ii) Any contract in respect of the Business or any of the Stations for the purchase, rental or use of any recordings, radio programming or programming services which is not terminable by the Fisher Entities without penalty on thirty (30) days’ notice or less or which provides for performance over a period of more than ninety (90) days or which involves the payment after the date hereof of more than $5,000;

(iii) Any contract in respect of the Business or any of the Stations for the purchase of merchandise, supplies or personal property or for the receipt of services (other than services referred to in clause (ii) above) which is not terminable by the Fisher Entities on thirty (30) days’ notice or less or which provides for performance over a period of more than ninety (90) days or which involves the payment after the date hereof of more than $5,000;

(iv) Any Time Sales Agreement in respect of the Business or any of the Stations which was not made in the ordinary course of the Business and consistent with past practice;

(v) Any guarantee of the obligations of any of the Stations’ customers, suppliers, or employees;

(vi) Any sales agency, advertising representative or advertising or public relations contract in respect of the Business or any of the Stations which is not terminable by the Fisher Entities without penalty on thirty (30) days’ notice or less or which provides for payments over a period of more than ninety (90) days or which involves the payment after the date hereof of more than $5,000;

(vii) Any agreement or arrangement, written or oral, with salaried or non-salaried employees, except as set forth in Schedule 3.16, with respect to the Business or any of the Stations;

(viii) Any contract in respect of the Business or any of the Stations other than those listed in subsections (ii), (iii) and (vi) which the Fisher Entities reasonably anticipate will involve the payment of more than $5,000;

(ix) Any partnership, joint venture or other similar agreement or arrangement relating to the Stations;

(x) Any agreement or instrument which provides for, or relates to, the incurrence by Fisher Radio of debt for borrowed money (except for such agreements or instruments which shall not apply to Buyer or its Affiliates upon Closing); or

(xi) Any agreement outside of the ordinary course of the Business containing any covenant or provision prohibiting Fisher Radio from engaging in any line or type of business (except for such agreements which shall not apply to Buyer or its Affiliates upon Closing).

Section 3.18 Status of Contracts.

(a) Each of the leases, contracts and other agreements listed in Schedules 3.10(a), 3.12 and 3.17(a), but excluding contracts and other agreements that are designated as Excluded Assets in Section 2.2 or Schedule 2.2 (the “Station Agreements”), constitutes a valid and binding obligation of either or both of the Fisher Entities party thereto and, to the Knowledge of the Fisher Entities, the other parties thereto (subject to bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors’ rights generally), is in full force and effect (subject to expiration or termination in accordance with its terms), and (except as set forth in Schedule 3.2(c) and except for those Station Agreements which by their terms will expire prior to the Closing Date or will be otherwise terminated prior to the Closing Date in accordance with the provisions hereof or at the direction of Buyer) may be transferred to the Buyer pursuant to this Agreement on terms and conditions no less favorable in any material respect than those contained in the relevant Station Agreement on the date hereof (as the Station Agreement may be modified prior to the Closing in accordance with the provisions of this Agreement or the TBA), and which will not, by reason of assignment to Buyer, increase the obligations or liabilities of Buyer under such agreement in any material respect, and will be in full force and effect at the time of such transfer (subject to expiration or termination in accordance with its terms), in each case without breaching the terms thereof or resulting in the forfeiture or impairment of any rights thereunder and without the consent, approval or act of, or the making of any filing with, any other party.

(b) Each Fisher Entity has fulfilled and performed in all material respects its obligations under each of the Station Agreements to which it is a party, and neither Fisher Entity is in, or alleged to be in, breach or default under any of the Station Agreements in any material respect and, to the Knowledge of the Fisher Entities, no other party to any of the Station Agreements has committed a breach or default thereunder in any material respect that remains uncured, and no event has occurred and no condition or state of facts exists which, with the passage of time or the giving of notice or both, would constitute such a default or breach in any material respect by either Fisher Entity or, to the Knowledge of the Fisher Entities, by any such other party. The Fisher Entities have delivered or made available to the Buyer complete and correct copies of each of the written Station Agreements, together with all amendments thereto, or true and complete memoranda describing the material terms of all oral Station Agreements, and all liabilities and obligations under such Station Agreements can be ascertained from such copies or memoranda. There are no oral contracts material to the operation of the Business, or the Stations. Except as otherwise disclosed on Schedule 2.2 and Schedule 3.26 and except as permitted by Section 5.16, the Station Agreements as amended through the date of this Agreement will not be modified or renewed without Buyer’s written consent, which consent shall not be unreasonably withheld or delayed, except the Fisher Entities shall be permitted to renew any Station Agreement that pursuant to its terms renews automatically on a month-to-month basis.

Section 3.19 No Violation, Litigation or Regulatory Action. Except as set forth in Schedule 3.19 and for such matters as have been remedied or cured, the Fisher Entities have complied in all material respects with all, and is not in material violation of any, laws, regulations, rules, writs, injunctions, ordinances, franchises, decrees or orders of any court or of

any foreign, federal, state, municipal or other Governmental Body which affect or are applicable to the Purchased Assets, the Stations or the Business, and, without limiting the generality of the foregoing, except as set forth on Schedule 3.19:

(a) There are no unsatisfied judgments outstanding against the Fisher Entities, the Purchased Assets, the Stations or the Business which might adversely affect the continued operation of the Stations or impair the value of the Purchased Assets or which might adversely affect the Fisher Entities’ ability to perform in accordance with this Agreement;

(b) There are no lawsuits, suits or proceedings pending or, to the Knowledge of the Fisher Entities, threatened against the Fisher Entities in respect of the Purchased Assets, the Stations or the Business which could adversely affect the continued operation of the Stations or impair the value of the Purchased Assets or which could adversely affect the Fisher Entities’ ability to perform in accordance with this Agreement (other than any of the foregoing generally affecting similarly-situated companies and that are not specific to the Fisher Entities);

(c) There are no claims or investigations pending or, to the Knowledge of the Fisher Entities, threatened against the Fisher Entities in respect of the Purchased Assets, the Stations or the Business which could adversely affect the continued operation of the Stations or impair the value of the Purchased Assets or which could adversely affect the Fisher Entities’ ability to perform in accordance with this Agreement (other than any of the foregoing generally affecting similarly-situated companies and that are not specific to the Fisher Entities);

(d) As of the date of this Agreement there is no action, suit or proceeding pending or, to the Knowledge of the Fisher Entities, threatened, which questions the legality or propriety of the transactions contemplated by this Agreement or the TBA (other than any of the foregoing generally affecting similarly-situated companies and that are not specific to the Fisher Entities, this Agreement or the TBA);

(e) All of the Stations’ transmitting and studio equipment is operating in accordance with the terms and conditions of the FCC Licenses and all underlying construction permits, and the rules, regulations and policies of the FCC in all material respects, including, without limitation, all regulations concerning (i) human exposure to radio frequency radiation and (ii) with respect to material broadcast equipment, equipment authorization. To the Knowledge of the Fisher Entities, none of the Stations is causing interference in material violation of FCC rules to the transmission of any other broadcast station or communications facility. The Fisher Entities have not received any written complaints with respect to such interference, and, to the Knowledge of the Fisher Entities, no other broadcast station or communications facility is causing interference in violation of FCC rules to the Stations’ transmissions or the public’s reception of such transmissions;

(f) The Fisher Entities have, in the conduct of the Business and the operation of the Stations, complied in all material respects with all applicable laws, rules and regulations relating to the employment of labor;

(g) Except as set forth on Schedule 3.19, the Fisher Entities have not received any notification from the FCC that the Fisher Entities’ employment practices fail to comply with FCC rules and policies that remains pending and unresolved;

(h) All material ownership reports, employment reports, tax returns and other material documents required to be filed by the Fisher Entities with the FCC or other Governmental Body with respect to the Stations or the Business have been filed. Such items as are required to be placed in the Stations’ local public inspection files have been placed in such files. All material proofs of performance and measurements that are required to be made by the Fisher Entities with respect to the Stations’ transmission facilities have been completed and filed at each Station as required. At the time of filing, all information provided by the Fisher Entities and, to the Knowledge of the Fisher Entities, all information provided by unaffiliated third parties, contained in the foregoing documents was true, complete and accurate in all material respects and was updated to the extent required by the Communications Act and the rules and regulations of the FCC as circumstances may have changed during the pendency thereof; and

(i) All towers and other structures on the Real Property that are owned by the Fisher Entities and, to the Knowledge of the Fisher Entities, all towers and other structures on the Real Property that are leased by the Fisher Entities, are painted and lighted in accordance with the requirements of the FCC Licenses, the FCC, FAA and all applicable requirements of federal, state and local law in all material respects. Except as set forth on Schedule 3.9(d), appropriate notification to the FAA has been filed for such towers where required by the FCC’s rules and regulations.

Section 3.20 Insurance. Set forth on Schedule 3.20 is an accurate and complete list of the policies of fire and extended coverage and casualty, liability and other forms of insurance that the Fisher Entities maintain as of the date of this Agreement in respect of the Purchased Assets, the Stations or the Business, in such amounts and against such risks and losses as will provide adequate insurance coverage for the replacement cost of the Purchased Assets, the Stations or the Business with respect to all risks normally insured against by a Person or entity carrying on the same business as the Fisher Entities. All insurance policies listed on Schedule 3.20 are in full force and effect and there are no outstanding claims under any insurance policy or default with respect to provisions in any such policy which claim or default individually or in the aggregate would reasonably be expected to have a Material Adverse Effect on the Purchased Assets, the Stations or the Business.

Section 3.21 Employee Plans; ERISA.

(a) Schedule 3.21 lists all compensation and benefit plans, programs, arrangements, contracts, agreements, understandings, commitments and policies sponsored, administered, maintained, or contributed to, by or on behalf of the Fisher Entities, any of their subsidiaries, any ERISA Affiliate or any of its subsidiaries as of the date hereof (including “employee benefit plans” within the meaning of Section 3(3) of ERISA, all pension, profit sharing, savings and thrift, bonus, stock or cash based incentive, deferred compensation, stock option, stock purchase, stock ownership, restricted stock, stock appreciation, phantom stock, ¨fringe benefits, vacation, retention, change in control, workers’ compensation, unemployment

compensation, post-retirement, severance pay, retention pay, and medical, disability, accident and life insurance plans) relating to the Business or any of the Stations for the benefit of any former or current employees of the Fisher Entities or their respective dependents (collectively, the “Employee Plans”).

(b) Neither of the Fisher Entities nor any ERISA Affiliates (i) has ever sponsored, administered, maintained, contributed to, been obligated to contribute to, participated in or agreed to participate in, any Employee Plan that is subject to Title IV of ERISA, or a multi-employer plan (as defined in Section 3(37) of ERISA or (ii) except as set forth on Schedule 3.21, has ever provided health care or any other non-pension benefits to any employees after their employment is terminated (other than as required by part 6 of subtitle B of title I of ERISA) or has ever promised to provide such post-termination benefits. Neither of the Fisher Entities nor any ERISA Affiliate has withdrawn from a multi-employer plan within the meaning of Section 414(f) of the Code, which withdrawal could impose liability on the Buyer. No Employee Plan of the Fisher Entities is a multiple employer plan within the meaning of Section 413(c) of the Code. No Employee Plan of the Fisher Entities is a multiple employer welfare arrangement as defined in Section 3(40) of ERISA.

(c) Each Employee Plan that is intended to be qualified under Code Section 401(a) is so qualified and has been so qualified during the period from its adoption to date and is the subject of a favorable determination letter. The most recent copy of such determination letter has been provided to Buyer. Each such plan has been administered in accordance with its terms and in substantial compliance with applicable law, except where the failure to so administer such plan has been corrected in accordance with the IRS’s Employee Plans Compliance Resolution System. Except as described in Schedule 3.21, the Fisher Entities know of no circumstances that would affect the validity of that letter or of any fact or set of circumstances that would affect the qualified status of any such Employee Plan or trust. Except as set forth in Schedule 3.21, (i) neither of the Fisher Entities nor any ERISA Affiliate has or had any liability for unpaid contributions with respect to any Employee Plan that is an “employee pension benefit plan” as defined in Section 3(2) of ERISA; (ii) the Fisher Entities and any ERISA Affiliates have made all required contributions under such plan for all periods; and (iii) proper accruals have been made and are reflected on the appropriate balance sheet, books and records.

(d) No plan that is an employee benefit plan under Section 3(3) of ERISA listed in Schedule 3.21 has engaged in a transaction that is a prohibited transaction, as defined in Section 406 of ERISA and Section 4975 of the Code, for which there is no exemption and with respect to which the Fisher Entities have on the date hereof incurred any Liability that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect upon the Purchased Assets, the Stations or the Business (taken as a whole).

(e) Neither of the Fisher Entities nor any ERISA Affiliate has any announced plan or legally binding commitment to create any additional Employee Plan that is intended to cover one or more TBA Transferred Employees or APA Transferred Employees.

Section 3.22 Environmental Protection. In respect of the Business and the Purchased Assets, except as set forth in Schedule 3.22:

(a) The operation of the Business by the Fisher Entities and, to the Knowledge of the Fisher Entities, by all of its predecessors, is and at all times has been in material compliance with all applicable Environmental Laws, the Fisher Entities hold all material Permits required under Environmental Laws for the operation of the Business, and no modification or change to the operations of the Business will be required upon the renewal of any such Permits other than modifications or changes required due to changes in law occurring after the date hereof.

(b) (i) No claims arising under Environmental Laws are pending or, to the Knowledge of the Fisher Entities, threatened, (ii) there are no writs, injunctions, decrees, orders or judgments outstanding or, to the Knowledge of the Fisher Entities, threatened relating to compliance with or liability under any Environmental Law, and (iii) the Fisher Entities do not have any material liability under any Environmental Law.

(c) To the Knowledge of the Fisher Entities, there have been no Releases of Hazardous Materials in, on or under the Real Property that could result in any material investigation or material remedial action by any Governmental Body pursuant to any Environmental Law.

(d) To the Knowledge of the Fisher Entities, no facility or property of the Fisher Entities nor any facility or property to which the Fisher Entities transported or arranged for the transportation of any Hazardous Materials is listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA), or on any similar federal or state list of sites requiring investigation or remediation.

(e) To the Knowledge of the Fisher Entities, (i) there are no structures, improvements, equipment, activities, fixtures or facilities on any Real Property that are constructed with, use or otherwise contain radioactive materials, lead or urea formaldehyde unless the same are in good condition, ordinary wear and tear excepted, and in compliance in all material respects with Environmental Laws, and (ii) there are no asbestos-containing materials, polychlorinated biphenyls, or underground storage tanks (whether active or abandoned), or underground piping associated with such tanks on the Real Property.

(f) To the Knowledge of the Fisher Entities, there are no liens, restrictive covenants or other land use restrictions under Environmental Laws on any of the Real Property, and no government actions have been taken or are in process that could subject any of such properties to such liens, restrictive covenants or other land use restrictions, and the Fisher Entities are not required to place any notice or restriction relating to Hazardous Materials in any deed to such property.

(g) The Fisher Entities have not released any person nor waived any rights or defenses with respect to any Environmental Conditions related to the Business, the Stations or the Purchased Assets, or any claim arising in connection therewith under any Environmental Law.

(h) There is no Environmental Report that has been received by the Fisher Entities or, to the Knowledge of the Fisher Entities, any other Party, relating to the Business, the Stations or the Purchased Assets, that has not been delivered or made available to Buyer.

Section 3.23 Insolvency Proceedings. Neither the Fisher Entities nor the Purchased Assets are the subject of any pending or threatened insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary. Neither of the Fisher Entities has made an assignment for the benefit of creditors or taken any action in contemplation of or which would constitute a valid basis for the institution of any such insolvency proceedings. After giving effect to this transaction, each of the Fisher Entities (i) will have sufficient capital to carry on its business and transactions, (ii) will be able to pay its debts as they mature or become due, and (iii) will own assets the fair value of which will be greater than the sum of all liabilities (including contingent liabilities) not specifically assumed by Buyer pursuant to the terms of this Agreement. Neither of the Fisher Entities is insolvent nor will it become insolvent as a result of entering into or consummating this transaction.

Section 3.24 Citizenship. Neither of the Fisher Entities is a “foreign person” as defined in Section 1445(f)(3) of the Code. On the Closing Date, the Fisher Entities will deliver to Buyer an affidavit to that effect, verified as true and sworn to under penalty of perjury by a duly-authorized officer of each Fisher Entity. The affidavit shall also set forth the name, address, taxpayer identification number, and such additional information as may be required to exempt the transaction from the withholding provisions of Section 1445 of the Code. Buyer shall have the right to furnish copies of the affidavit to the Internal Revenue Service.

Section 3.25 No Misleading Statements. To the Knowledge of the Fisher Entities, no representation or warranty or other statement made by, nor any information provided to Buyer by, the Fisher Entities in this Agreement or in any document, instrument, or certificate provided to Buyer pursuant to this Agreement, contains any untrue statement of a material fact or omits a material fact necessary in order to make such statements or information not misleading in any material respect.

Section 3.26 Transactions with Affiliates. Except as set forth on Schedule 3.26, no Affiliate of the Fisher Entities provides any goods or services or owns or leases property or is a party to any contract affecting the operation of the Purchased Assets, the Stations or the Business.

Section 3.27 No Finder. Except for Kalil & Co., Inc., neither the Fisher Entities, nor any party acting on behalf of the Fisher Entities has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.

Section 3.28 Accounts Receivable. All accounts receivable of the Fisher Entities relating to the Business have arisen from bona fide transactions by the Fisher Entities in the ordinary course of the Business consistent with past practice and constitute only valid claims which are not subject to counterclaims or setoffs.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

OF BUYER

As an inducement to the Fisher Entities to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer makes the following representations and warranties to the Fisher Entities, all of which shall be true, correct, and complete as of the date hereof and as of the Closing, except as otherwise specifically provided:

Section 4.1 Organization. Each of Entercom Portland and Entercom Portland License is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Entercom Portland is, or will be at Closing, duly qualified as a foreign limited liability company to do business in, and in good standing under, the laws of the States of Oregon. Buyer has the requisite limited liability company power and authority to own or lease and to operate the properties and assets used in connection with its business as currently being conducted or to be acquired pursuant hereto.

Section 4.2 Authority of Buyer.

(a) Buyer has the requisite limited liability company power and authority to execute and deliver this Agreement and all of the other agreements (including the TBA) and instruments to be executed and delivered by Buyer pursuant hereto (collectively, the “Buyer Ancillary Agreements”), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof.

(b) The execution, delivery and performance of this Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized and approved by all necessary action of Buyer and do not require any further authorization or consent of Buyer or its members. This Agreement is, and the TBA and each other Buyer Ancillary Agreement when executed and delivered by Buyer and the other parties thereto will be, a legal, valid and binding agreement of Buyer enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(c) Except as set forth in Schedule 4.2, none of the execution and delivery by Buyer of this Agreement, the TBA and the other Buyer Ancillary Agreements, the consummation by Buyer of any of the transactions contemplated hereby or thereby or compliance by Buyer with or fulfillment by Buyer of the terms, conditions and provisions hereof or thereof will:

lease, guaranty or material agreement, or any judgment, order, award or decree, to which Buyer is a party or any of the assets of Buyer is subject or by which Buyer is bound, or any statute, other law or regulatory provision affecting Buyer or its assets; or

(ii) require the approval, consent, authorization or act of, or the making by Buyer of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except for such of the foregoing as are necessary pursuant to the Communications Act.

Section 4.3 Litigation. Except as set forth in Schedule 4.3, Buyer is not a party to any action, suit or proceeding pending or, to the knowledge of Buyer, threatened which, if adversely determined, would reasonably be expected to materially restrict the ability of Buyer to consummate the transactions contemplated by this Agreement. There is no order to which Buyer is subject which would reasonably be expected to restrict the ability of Buyer to consummate the transactions contemplated by this Agreement.

Section 4.4 No Finder. Neither Buyer nor any party acting on its behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.

Section 4.5 Qualifications as FCC Licensee. Other than such facts and circumstances affecting similarly-situated companies that are not specific to Buyer, Buyer knows of no fact or circumstance which would, under the Communications Act, disqualify or preclude Buyer from becoming the licensee of the Stations or materially delay the obtaining of the approvals required for the transactions contemplated by this Agreement. Except as set forth in Schedule 4.5, there are no proceedings, complaints, notices of forfeiture, claims, or investigations pending or, to the knowledge of Buyer, threatened against Buyer or any principal, officer, member, or owner of Buyer that would materially impair the qualifications of Buyer to become a licensee of the Stations.

Section 4.6 Funds Available. Buyer is in all respects financially capable of acquiring and operating the Stations and has access to sufficient funds to pay the Purchase Price and to consummate the transactions contemplated by this Agreement.

ARTICLE 5.

ACTION PRIOR TO THE CLOSING DATE

The respective parties hereto covenant and agree to take the following actions between the date hereof and the Closing Date, unless another date is otherwise specified:

Section 5.1 Investigation of the Business. Upon the request of Buyer, the Fisher Entities shall afford to the officers, employees and authorized representatives of Buyer (including, without limitation, independent public accountants, attorneys and consultants) reasonable access during normal business hours, and upon not less than 72-hours prior notice, to the offices, properties, employees and business and financial records (including computer files,

retrieval programs and similar documentation) of the Business to the extent Buyer shall reasonably deem necessary or desirable and shall furnish to Buyer or its authorized representatives such additional information concerning the Business as shall be reasonably requested; provided, however, that any such investigation shall be conducted in such a manner as not to interfere unreasonably with the operations of the Fisher Entities. It is expressly understood that, pursuant to this Section 5.1, Buyer, at its sole expense, shall be entitled to make such engineering inspections of the Stations, such inspections of the Stations for the purpose of appraising the Purchased Assets and such audits of the Stations’ financial records as Buyer may desire, so long as the same do not unreasonably interfere with the operation of the Stations; provided, that neither the furnishing of such information to Buyer or its representatives nor any investigation made heretofore or hereafter by Buyer shall affect Buyer’s right to rely upon any representation or warranty made by the Fisher Entities in this Agreement, each of which shall survive any furnishing of information to Buyer or its agents, or any investigation by Buyer or its agents, subject to Section 11.1 hereof. Buyer shall give the Fisher Entities prompt written notice if Buyer discovers facts or circumstances that would cause any of the Fisher Entity representations to be materially false or misleading, provided, however, that failure to give such notice shall neither excuse the failure of such representations to be true when and as made, nor constitute a material breach of this Agreement.

Section 5.2 Preserve Accuracy of Representations and Warranties. The Fisher Entities shall refrain from taking any action that would render any representation or warranty contained in Article 3 hereof inaccurate. Buyer shall refrain from (i) taking any action that would render any representation or warranty contained in Article 4 hereof inaccurate or (ii) taking any action with respect to the TBA that would render any representation or warranty made by the Fisher Entities in Article 3 inaccurate. Each party shall promptly notify the other of (i) any action, suit or proceeding that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of any transaction contemplated by this Agreement, and (ii) any breach of this Agreement or any representation or warranty set forth herein, of which such party becomes aware; provided, however, that a failure to so notify shall not be a material breach of this Agreement. The Fisher Entities shall promptly notify Buyer, and Buyer shall promptly notify the Fisher Entities, of any lawsuit, claim, proceeding or investigation that may be threatened, brought, asserted or commenced against the other which would have been listed in Schedule 3.19 or would be an exception to Section 4.3 if such lawsuit, claim, proceeding or investigation had arisen prior to the date hereof.

Section 5.3 FCC Consent; Other Consents and Approvals.

(a) As promptly as practicable after the date of this Agreement, but in any event no later than May 30, 2003, the Fisher Entities and Buyer shall file with the FCC an application in complete form requesting its consent to the assignment of the FCC Licenses (and any extensions or renewals thereof) to Buyer from the Fisher Entities (the “Transfer Application”). If the Transfer Application is not filed on or before May 30, 2003, the provisions of Section 5.8 shall apply. The Fisher Entities and Buyer will cooperate in the preparation of such Transfer Application and will diligently take and will cooperate in the taking of all reasonable steps necessary to prosecute expeditiously the Transfer Application and will use their reasonable best efforts to obtain promptly the FCC’s consent and approval of the Transfer

Application. Any fees assessed by the FCC incident to the filing or grant of such applications shall be borne equally by Buyer and the Fisher Entities, with each party responsible for one half of any such fees assessed; provided that Buyer will reimburse the Fisher Entities for Buyer’s share of such fees paid by the Fisher Entities, and the Fisher Entities will reimburse the Buyer for Fisher Entities’ share of such fees paid by the Buyer. The Fisher Entities and Buyer shall make available to each other, promptly after the filing thereof, copies of all reports filed by it or their Affiliates on or prior to the Closing Date with the FCC in respect of the Stations.

(b) The Fisher Entities and Buyer shall each use reasonable best efforts to obtain all consents, amendments or permits from Governmental Bodies which are required by the terms thereof or this Agreement for the consummation of the transactions contemplated by this Agreement, and shall jointly, diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such requests for approval or waiver and all proceedings necessary to secure such approvals and waivers.

Section 5.4 Operations of the Stations Prior to the Closing Date.

(a) Prior to the Closing Date, the Fisher Entities shall, consistent with past practice, use their reasonable best efforts to (subject to, and except as modified by, compliance with the other covenants contained in this Agreement and subject to the TBA):

(i) continue to promote and conduct advertising on behalf of the Stations and the Business at levels substantially consistent with past practice;

(ii) maintain the business organization of the Stations intact;

(iii) preserve the goodwill of the suppliers, contractors, licensors, employees, customers, distributors and others having business relations with the Business or the Stations;

(iv) maintain the employment of each current employee who is necessary for the continued operation of the Business or the Stations as currently operated (any voluntary departure of any employee between the date hereof and the Closing excepted);

(v) take reasonable measures consistent with past practice to preserve the Stations’ present customers and business relations; and

(vi) perform all Station Agreements without material default and pay all trade accounts payable in a timely manner; provided, however, that the Fisher Entities may dispute, in good faith, any of their alleged obligations.

(b) Prior to the Closing Date, except as approved by Buyer pursuant to Section 5.4(c) or as expressly required or permitted by this Agreement and subject to the TBA, the Fisher Entities shall:

(i) operate and carry on the operations of the Stations and conduct the Business only in the ordinary course consistent with past practices (subject to, and except as modified by, compliance with the other covenants contained in this Agreement and the TBA and FCC rules and regulations);

(ii) subject to Section 11.12, maintain the Purchased Assets in their present condition (reasonable wear and tear in normal use excepted);

(iii) subject to Section 11.12, continue making capital expenditures at budgeted levels as set forth on Schedule 5.4;

(iv) maintain their respective books and records in the usual and ordinary manner, on a basis consistent with prior periods;

(v) comply in all material respects with all laws, rules, ordinances and regulations applicable to it, to the Purchased Assets, the Business and the operation of the Stations;

(vi) retain the Stations’ libraries of recordings and other programming;

(vii) maintain the present character and entertainment format of the Stations and the quality of their programs;

(viii) maintain all inventories of supplies, tubes, and spare parts at levels consistent with the Stations’ prior practices; and

(ix) prepare and file all Tax Returns that pertain to the Purchased Assets.

(c) Notwithstanding Section 5.4(a) and (b), and subject to the Communications Act and the rules and regulations of the FCC and the provisions contained in the TBA and actions taken by or at the direction of Buyer in connection with the TBA, except as expressly contemplated by this Agreement, without the express prior written approval of the Buyer, the Fisher Entities in respect of the Stations shall not:

(i) make any material change in the Business or the operations of the Stations;

(ii) make any capital expenditure, or enter into any contract or commitment therefor, in excess of $25,000 in the aggregate, provided that Buyer’s consent shall not be required for the capital expenditures required to be made pursuant to Section 5.4(b)(iii) and set forth on Schedule 5.4);

(iii) enter into any contract for the purchase of real property or exercise any option to extend a lease listed in Schedules 3.10(d);

(iv) sell, lease (as lessor), transfer or otherwise dispose of (including any transfers to any Affiliates of the Fisher Entities), or mortgage or pledge, or impose or suffer to be imposed any Encumbrance on, any of the Purchased Assets, other than Excluded Assets and other than inventory and personal property sold or otherwise disposed of or consumed in the ordinary course of the Business and other than Permitted Encumbrances;

(v) create, incur or assume, or agree to create, incur or assume, any indebtedness for borrowed money (other than money borrowed or advances from the other of Fisher Entities or any Affiliate of the Fisher Entities in the ordinary course of the Business);

(vi) institute any material increase in any profit-sharing, bonus, incentive, deferred compensation, insurance, pension, retirement, medical, hospital, disability, welfare or other employee benefit plan with respect to their employees, other than in the ordinary course of the Business or as required by any such plan or Requirements of Law;

(vii) make any material change in the compensation of their employees, other than changes made in accordance with normal salary adjustments and consistent with past compensation practices or as required by contracts set forth on Schedule 3.17(a);

(viii) enter into any employment agreement for services to be performed on behalf of the Stations or the Business, except for those employment agreements that are for employees to replace former employees who resigned or who have been terminated, on similar terms and conditions and at comparable rates of compensation to those terms and conditions and rates of compensation provided to the former employees;

(ix) acquiesce in any infringement, unauthorized use or impairment of the Intellectual Property or change the Stations’ call signs;

(x) make a Tax election, settle any material controversy with any taxing authority or change accounting methods or procedures if the election, settlement or change pertains to the Purchased Assets and could reasonably be expected to affect Buyer or Buyer’s use of or rights in the Purchased Assets; or

(xi) enter into any contract or agreement of the nature of such contracts and agreements as are described in Section 3.17(b)(i) through (xi).

Section 5.5 Third Party Consents. The Fisher Entities shall use their commercially reasonable efforts to obtain the consents of the other contracting parties to the transactions contemplated hereby to the extent required by the Station Agreements requiring such consent. The delivery of such consents with respect to the Station Agreements that are identified on Schedule 3.17(a) to be material to the operation of the Stations (“Material Station Agreements”) shall, pursuant to Section 8.6, be a condition to Buyer’s obligation to close. To

the extent that transfer or assignment hereunder by the Fisher Entities to Buyer of any Station Agreement or license is not permitted or is not permitted without the consent of another Person, this Agreement shall not be deemed to constitute an undertaking to assign the same if such consent is not given or if such an undertaking otherwise would constitute a breach thereof or cause a loss of benefits thereunder. If, other than with respect to the Material Station Agreements, any such third party consent, approval or waiver is not obtained before the Closing, for a period continuing until the earlier of the first anniversary of the Closing Date or such consent, approval or waiver is obtained, the parties shall use their commercially reasonable efforts in good faith to cooperate, and to cause each of their respective Affiliates to cooperate, in effecting any lawful arrangement to provide to Buyer the economic benefits of the Station Agreements for which third party consents, approvals, and waivers are being sought after Closing, and Buyer shall, to the extent Buyer is provided with the benefits thereunder, assume and discharge the obligations under the Station Agreements after the Closing Date.

Section 5.6 Environmental Site Assessment. Within sixty (60) days of the execution of this Agreement, Buyer may engage an environmental consulting firm that is reasonably acceptable to the Fisher Entities for the purpose of obtaining a Phase I Environmental Assessment for each of the parcels of the Real Property (the “Environmental Assessment”). In the event the Environmental Assessment describes any recognized environmental conditions (the “Identified Environmental Conditions”) or indicates any potential that such conditions may exist that could reasonably be expected to result in a liability of Buyer, then Buyer may conduct or have conducted at its expense additional testing solely to confirm or negate the existence of the Identified Environmental Conditions. If any such Environmental Assessment or additional testing reflects the existence of the Identified Environmental Conditions, the Fisher Entities shall cause such conditions to be remedied prior to Closing such that no Identified Environmental Conditions exist; provided, however, that if remediation cannot be accomplished prior to the scheduled Closing Date, but can be accomplished within 120 days of such date, the Fisher Entities may postpone the Closing in order to accomplish such remediation for the number of days up to 120 necessary to accomplish such remediation; provided further, that the Fisher Entities shall not be obligated to expend in the aggregate in excess of One Million Dollars ($1,000,000) (the “Remediation Cap”) to effect such remediation prior to Closing. In the event that the aggregate amount of the remediation cost with respect to the Identified Environmental Conditions exceeds the Remediation Cap (any such specifically identified excess amount, the “Remediation Overage”), the Fisher Entities may elect not to take such remedial action. In such event, Buyer may require the Fisher Entities to proceed to Closing, in which event Buyer shall receive a reduction in the Purchase Price at Closing equal to One Million Dollars ($1,000,000), and in exchange for such reduction, the Fisher Entities thereafter shall be relieved of any liability to Buyer with respect to the Remediation Overage (whether pursuant to this Agreement or otherwise). Alternatively, if the Fisher Entities elect not to take such remedial action, Buyer may terminate this Agreement by notice to the Fisher Entities given within ninety (90) days after the date of this Agreement (provided that in any event Buyer shall have twenty (20) days after notification by the Fisher Entities that no remedial action shall be taken to terminate this Agreement). Subject to the other provisions of this Section 5.6, such Environmental Assessment shall not relieve the Fisher Entities of any obligation with respect to any representation, warranty or covenant of the Fisher Entities in this Agreement or waive any condition to Buyer’s obligations under this Agreement, except to the extent of the reduction in the Purchase Price and

the Remediation Overage described above. The cost of completing the Environmental Assessment shall be paid by Buyer.

Section 5.7 Public Announcement. None of the Fisher Entities, Buyer or any of their Affiliates shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such party shall be so obligated by law (including any filing to be made with the FCC) or by the rules, regulations or policies of any national securities exchange or association, in which case the other party shall be advised and the parties shall use reasonable efforts to cause a mutually agreeable release or announcement to be issued.

Section 5.8 Milestones.

(a) If the Transfer Application is not filed on or before May 30, 2003, and such failure to file is caused solely by Buyer, then the Fisher Entities may terminate this Agreement at any time prior to June 10, 2003 by providing written notice thereof to Buyer. In the event the Transfer Application is not filed on or before May 30, 2003 and such failure to file is not caused by Buyer, then Buyer shall file the Transfer Application promptly following the termination or expiration of the cause of such failure.

(b) If the FCC adopts a change to its radio multiple ownership rules relating to the definition of radio markets that makes the acquisition of the Stations by the Buyer impermissible due to Buyer’s proposed station ownership, Buyer shall, as soon as reasonably practicable, but in no case later than October 1, 2003, to the extent such action would make the acquisition of the Stations permissible pursuant to such changed rules, file an application or applications with the FCC (the “Station Trust Application”) to place into an insulated divestiture trust one of the Entercom AM Licenses and/or one of the Entercom FM Licenses, in either case, of Buyer’s choice.

(c) If the FCC grant of the Station Trust Application has not occurred on or before October 1, 2003, then the Fisher Entities may enter into negotiations with one or more third parties regarding the possible sale of the Stations to such third parties, and such negotiations undertaken in accordance with this Section 5.8(c) shall not be deemed a violation of the Fisher Entities’ obligations under Section 5.13; provided, however, that the Fisher Entities shall not enter into any agreement unless such agreement is contingent on termination of this Agreement.

(d) If the FCC grant of the Station Trust Application has not occurred on or before October 15 2003, then the Fisher Entities shall have the right to terminate this Agreement. If the Fisher Entities have not terminated this Agreement pursuant to this Section 5.8(d) on or before November 28, 2003, then such right of termination shall expire, and this Agreement shall remain in effect in accordance with its terms; provided, however, that if the FCC grant of the Station Trust Application occurs prior to the Fisher Entities giving notice of termination under this Section 5.8(d), such right of termination shall expire.

(e) Within five (5) business days following FCC grant of the Station Trust Application, Buyer shall place the designated Entercom AM License and/or Entercom FM

Licenses into trust in conformity with the terms of the Station Trust Application, and thereafter shall take all such actions as are reasonably to carry out the terms of the Station Trust Application.

Section 5.9 Administrative Violations. If the Fisher Entities receive any finding, order, complaint, citation or notice prior to the Closing Date which states that any aspect of the Stations’ operations violates any rule or regulation of the FCC or of any other Governmental Body (an “Administrative Violation”), the Fisher Entities shall promptly notify Buyer of the Administrative Violation, and shall, except to the extent otherwise provided in Section 5.6, remove or correct the Administrative Violation (provided, however, that the Fisher Entities may dispute, in good faith, the findings of any Administrative Violation), and be responsible for the payment of all costs associated therewith, including any fines or back pay that may be assessed; provided that nothing in this Section shall relieve the Fisher Entities of their obligations with respect to the representations and warranties contained herein; provided, further, that nothing in this Section shall require the Fisher Entities to remedy any Administrative Violation to the extent caused by or under the direction of Buyer under the TBA or otherwise, and Buyer shall remedy any such Administrative Violation.

Section 5.10 Acquisitions by Buyer. Buyer shall not acquire or attempt to acquire any radio broadcast stations in any market that will materially delay or impair the ability of Buyer to consummate the transactions contemplated by this Agreement.

Section 5.11 Adverse Developments. The Fisher Entities shall promptly notify Buyer of any materially adverse developments that occur prior to Closing with respect to the Purchased Assets, or the operation of the Stations or the Business, or with respect to the Transfer Application; provided, however, that compliance with the disclosure requirements of this Section 5.11 shall not relieve the Fisher Entities of any obligation with respect to any representation, warranty or covenant of the Fisher Entities in this Agreement or waive any condition to Buyer’s obligations under this Agreement.

Section 5.12 Additional Covenant. The Fisher Entities and Buyer shall use all commercially reasonable efforts to cause the consummation of the transactions contemplated by this Agreement. The Fisher Entities and Buyer shall not take any action that is inconsistent with their obligations under this Agreement in any material respect or that could reasonably be expected to materially hinder or materially delay the consummation of the transactions contemplated by this Agreement.

Section 5.13 No Solicitation Covenant. The Fisher Entities shall not, and each shall use its best efforts to cause its Affiliates, representatives and agents (including, without limitation, investment bankers, attorneys and accountants) not to, directly or indirectly, through any officer, director, member, partner, agent or otherwise, enter into, solicit, initiate, conduct or continue any discussions or negotiations with, or encourage or respond to any inquiries or proposals or offers by, or provide any information to, or otherwise cooperate in any other way with, any corporation, partnership, person or other entity or group, other than the Buyer and its representatives and agents, concerning (i) any sale of all or any portion of the Purchased Assets including without limitation the Business and the Stations, (ii) any merger, acquisition,

consolidation, recapitalization, liquidation, dissolution or similar transaction transferring or otherwise disposing of the Purchased Assets, the Business or the Stations to a party other than Buyer, or (iii) any transaction that would have an effect similar to the transactions described in (i) or (ii) (each such transaction being referred to herein as a “Proposed Acquisition Transaction”); provided that communication solely of the negative covenant in this Section 5.13 shall not be a violation hereof. The Fisher Entities hereby represent that as of the date of this Agreement, they are not engaged in discussions or negotiations with any party other than Buyer with respect to any Proposed Acquisition Transaction. A Proposed Acquisition Transaction shall not include a merger, acquisition, consolidation, recapitalization, liquidation, dissolution or similar transaction involving either of the Fisher Entities or their respective parent corporations that does not modify or otherwise invalidate the obligations of the Fisher Entities hereunder or affect in any way their ability to perform such obligations.

Section 5.14 Copies of FCC Applications. The Fisher Entities shall promptly deliver to Buyer copies of any applications filed with the FCC with respect to the Stations promptly after the filing of the same with the FCC.

Section 5.15 Estoppel Certificates. The Fisher Entities shall use commercially reasonable efforts to obtain executed versions of estoppel certificates from the landlords under the Real Property Leases in a form reasonably acceptable to Buyer.

Section 5.16 Trade Agreements.

(a) From the date of the Agreement through the Closing, the Fisher Entities shall not modify or amend any existing Trade Agreements or enter into any new Trade Agreements (other than in the ordinary course of the Business or Trade Agreements that provide for termination upon thirty (30) days notice without financial penalty and subject to the provisions contained in the TBA) without the prior written consent of the Buyer which shall not be unreasonably withheld or delayed.

(b) The amount by which the aggregate Trade Payables under all Trade Agreements exceed the Trade Receivables (the “Negative Trade Balance”) on the TBA Effective Date shall not exceed the Negative Trade Balance as of May 22, 2003.

Section 5.17 Title Examination; Title Insurance; Surveys.

(a) Buyer may, at its expense, conduct a review and examination with respect to title of the Real Property, and the Fisher Entities shall cooperate as reasonably necessary in completion of such review and examination. If any such review and examination reflects the existence of any defect, encumbrance, or other limitation with respect to any such title which would cause a material limitation or exclusion from the title insurance to be obtained under Section 5.17(b) (other than a Permitted Encumbrance) (a “Title Defect”), then Buyer shall notify the Fisher Entities of such Title Defect within sixty (60) days after the date of this Agreement, and the Fisher Entities shall, at their sole cost and expense, use best efforts to cause such Title Defect to be cleared or otherwise remedied prior to Closing. If, despite the Fisher Entities’ best efforts, the Fisher Entities are unable to do so prior to the Closing, then they shall have no obligations to do so thereafter.

(b) Within ten (10) days of the date of this Agreement, the Fisher Entities shall deliver to Buyer all current title insurance policies and surveys with respect to the Real Property in their possession. The Fisher Entities shall obtain the commitment of a title insurance company reasonably satisfactory to Buyer to issue to Buyer, at standard rates, ALTA standard coverage title insurance policy, including a zoning endorsement, insuring Buyer’s interest in the Real Property set forth in Schedule 5.17(b) (the “Title Commitments”). The costs of the Title Commitments and the policy to be issued pursuant to the Title Commitment (to the extent of the cost of standard coverage title insurance) shall be paid by the Fisher Entities. If Buyer desires extended coverage title insurance or any endorsements (including the zoning endorsement referenced above), then Buyer shall be responsible for any additional premiums with respect thereto. Buyer shall obtain any commitment for lender’s policies and shall be responsible for the payment of premiums with respect thereto. The Fisher Entities shall take all necessary actions, including, without limitation, the execution of all customary affidavits and other documentation, to enable Chicago Title Insurance Company of Oregon to issue policies of title insurance to Buyer with respect to the Real Property.

(c) Buyer may obtain surveys of the Real Property performed by surveyors reasonably acceptable to Buyer sufficient to remove any “survey exception” from the title insurance policies to be issued pursuant to the Title Commitments. The cost of such surveys shall be borne by Buyer.

Section 5.18 Access to Real Property. The Fisher Entities shall, at their expense, ensure that all access roads and easements and other rights required to permit access to the owned Real Property as currently accessed or a reasonable alternative providing legal and physical access with comparable road conditions to those presently used by the Fisher Entities (the “Access Easements”) have been obtained and are duly recorded or otherwise provided with respect to any Real Property to which they apply.

Section 5.19 Fisher Board Approval. The Fisher Entities shall use their best efforts to obtain the Fisher Board Approval as soon as practicable, but in no event later than 5:00 p.m. PDT on June 4, 2003. Upon receipt of the Fisher Board Approval, the Fisher Entities shall promptly provide written notice to Buyer of the same.

ARTICLE 6.

ADDITIONAL AGREEMENTS

Section 6.1 Taxes; Sales, Use and Transfer Taxes.

(a) The Fisher Entities shall pay after the Closing when due all Taxes for taxable periods ending on or prior to the Closing Date and for Pre-Closing Straddle Periods that have given rise to, or will give rise to an Encumbrance on the Purchased Assets in the hands of Buyer after the Closing Date. Notwithstanding the foregoing, no payments shall be required to be made for Taxes pursuant to the preceding sentence to the extent such Taxes are to be prorated pursuant to Section 2.11 of this Agreement. For purposes of this Agreement, in the case of Taxes that are payable with respect to a Straddle Period, the portion of such Tax allocable to the Pre-Closing Straddle Period shall (a) in the case of any Taxes based on the value of property,

such as property or ad valorem Tax, be deemed to be the amount of such Tax for the entire period multiplied by a fraction, the numerator of which is the number of days in the Pre-Closing Straddle Period and the denominator of which is the number of days in the Straddle Period and (b) in the case of any other Tax, such as income, sales or gross receipts, be deemed to equal the amount that would be payable if the taxable year ended as of the end of the Closing Date.

(b) Subject to the other provisions of this Section 6.1, Buyer shall notify the Fisher Entities of any Tax obligation to be paid pursuant to Section 6.1(a) within a reasonable time prior to the date such payment is due and the Fisher Entities shall wire transfer funds to Buyer for value no later than two (2) days before such payments are due.

(c) To the extent that the amount of any adjustment made to the Purchase Price in favor of Buyer pursuant to Section 2.11 in respect of any Tax exceeds the amount actually payable with respect to the period covered by such calculation, Buyer shall promptly reimburse the Fisher Entities for the full amount of such excess.

(d) Buyer and the Fisher Entities shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of any Tax Return related to the Stations or the Purchased Assets and any audit, litigation or other proceeding with respect to Taxes that relates to the Stations or the Purchased Assets. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to the preparation of any Tax Return, audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(e) Any sales, use or other transfer Taxes payable by reason of transfer and conveyance of the Business, the Stations or the Purchased Assets hereunder and any documentary stamp or transfer Taxes payable by reason of the real estate or interests therein included in the Purchased Assets shall be paid by the Fisher Entities. Except as otherwise provided in Section 5.3, all fees relating to any filing with any Governmental Body required for transfer and conveyance of the Business, the Stations or the Purchased Assets hereunder shall be paid by the Fisher Entities.

Section 6.2 Employees; Employee Benefit Plans.

(a) Except for those employees listed on Schedule 6.2, on the TBA Effective Date, Buyer may extend offers of employment to employees of the Fisher Entities whose employment relates to the Business or any of the Stations to whom it desires to offer employment on such terms and conditions that Buyer shall determine in its own discretion (such employees who accept Buyer’s offer of employment hereinafter referred to as the “TBA Transferred Employees”); provided, however, that no such terms and conditions shall restrict the ability of the Fisher Entities to rehire the TBA Transferred Employees or the ability of the TBA Transferred Employees to be rehired by the Fisher Entities in the event that Closing fails to occur or the TBA is terminated by the Fisher Entities pursuant to Sections 10.1(a)(vii) or (ix); and provided, further, that prior to the TBA Effective Date, Buyer shall notify the Fisher Entities of whether or not Buyer will assume the contract listed as item 15 on Schedule 3.16 (the “Schedule

3.16 Contract”). If Buyer elects not to assume the Schedule 3.16 Contract, then Buyer and its Affiliates shall not hire the employee who is a party to such contract until January 1, 2006. Nothing in this Agreement shall obligate Buyer to hire any such employees. The Fisher Entities shall terminate the employment of all TBA Transferred Employees effective upon the TBA Effective Date and shall cooperate with, and use commercially reasonable efforts to assist, and not interfere with or impede Buyer in its efforts to secure satisfactory employment arrangements with the TBA Transferred Employees to whom Buyer makes offers of employment. If Closing fails to occur for any reason or if the Fisher Entities terminate the TBA pursuant to Sections 10.1(a)(vii) or (ix), the Fisher Entities shall have the right to offer employment to the TBA Transferred Employees, and Buyer shall cooperate with, and use commercially reasonable efforts to assist, and not interfere with or impede, the Fisher Entities in their efforts to rehire such employees. While the TBA is effective, Buyer shall allow those TBA Transferred Employees who, prior to their employment with Buyer, performed billing and accounts receivable functions for the Fisher Entities, to continue to perform such functions for the Fisher Entities as the Fisher Entities may reasonably request in the ordinary course of business.

(b) Effective as of the Closing Date, Buyer may extend offers of employment to employees listed on Schedule 6.2 to whom it desires to offer employment on such terms and conditions that Buyer shall determine in its own discretion (such employees who accept Buyer’s offer of employment hereinafter referred to as the “APA Transferred Employees”). Nothing in this Agreement shall obligate Buyer to hire any such employees. The Fisher Entities shall terminate the employment of all APA Transferred Employees effective upon the Closing Date and shall cooperate with, and use commercially reasonable efforts to assist, and not interfere with or impede Buyer in its efforts to secure satisfactory employment arrangements with the APA Transferred Employees to whom Buyer makes offers of employment.

(c) The Fisher Entities shall vest all TBA Transferred Employees in all benefits accrued through the TBA Effective Date and all APA Transferred Employees in all benefits accrued through the Closing Date under any Employee Plan that is intended to be qualified under Section 401(a) of the Code.

(d) Buyer shall not be obligated to provide, nor shall assume any obligation or liability relating to COBRA Coverage for an employee of the Fisher Entities or the Stations or any beneficiary who incurs a qualifying event on or prior to Closing.

(e) Each TBA Transferred Employee shall be eligible effective immediately upon the TBA Effective Date, and each APA Transferred Employee shall be eligible effective immediately upon the Closing, to become a participant in such employee benefit plans (as such term is defined in Section 3(3) of ERISA) and such other programs and arrangements as may be provided by Buyer to similarly situated employees.

(f) The Fisher Entities shall be solely responsible for the Employee Plans and the Fisher Entities’ workers compensation arrangements and all obligations and liabilities thereunder. Except as provided in this Section 6.2, Buyer shall not assume any of the Employee Plans or any obligation or liability thereunder. The Fisher Entities shall be solely responsible for all obligations and liabilities associated with any employees of the Fisher Entities who are not

TBA Transferred Employees or APA Transferred Employees and for all obligations and liabilities associated with any TBA Transferred Employee or APA Transferred Employees that arise from or relate to facts, circumstances or conduct of the Fisher Entities, any of their subsidiaries, any ERISA Affiliate of any of their Subsidiaries that occurred or is deemed to occur on or prior to the TBA Effective Date in the case of any TBA Transferred Employee, or Closing in the case of any APA Transferred Employee. The Fisher Entities shall be responsible for, shall indemnify Buyer for and shall hold harmless Buyer from and against any adverse consequences that Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by, any actions taken by the Fisher Entities or the Stations or any ERISA Affiliate with respect to an Employee Plan.

(g) The Fisher Entities shall be responsible for all liabilities or obligations under the Worker Adjustment and Retraining Notification Act and any state law equivalent statutes resulting from their actions contemplated by this Agreement.

(h) The Fisher Entities will remain responsible for (i) all benefits payable to their employees who, as of the close of business on the day immediately preceding the TBA Effective Date in the case of any TBA Transferred Employee, or the Closing Date in the case of any APA Transferred Employee, were determined to be disabled in accordance with the applicable provisions of the health, accident, sickness, salary continuation, or short-term or long-term disability benefit plans or programs of the Fisher Entities, and (ii) all benefits payable to their employees, who as of the close of business on the business day immediately preceding the TBA Effective Date in the case of any TBA Transferred Employee, or the Closing Date in the case of any APA Transferred Employee, were receiving short-term disability benefits in accordance with the applicable provisions of the short term disability benefit plans or programs of the Fisher Entities; and (iii) all benefits payable to employees of the Fisher Entities who, as of the close of business on the business day immediately preceding the TBA Effective Date in the case of any TBA Transferred Employee, or the Closing Date in the case of any APA Transferred Employee, were on any type of leave other than vacation leave. For purposes of this Agreement: (i) a claim for health benefits (including, without limitation, claims for medical, prescription drug and dental expenses) will be deemed to have been incurred on the date on which the related medical service or material was rendered to or received by the employee claiming such benefit, (ii) a claim for sickness or disability benefits based on an injury or illness occurring on or prior to the Closing Date will be deemed to have been incurred prior to the Closing Date, and (iii) in the case of any claim for benefits other than health benefits and sickness and disability benefits (e.g., life insurance benefits), a claim will be deemed to have been incurred upon the occurrence of the event giving rise to such claims.

(i) The Fisher Entities shall be responsible for, and shall indemnify and hold Buyer harmless for, all workers’ compensation claims (i) asserted or filed by employees on or before Closing; (ii) asserted or filed by the APA Transferred Employees and the TBA Transferred Employees after the Closing to the extent that the claim arises from pre-Closing events or circumstances regardless of whether the events or circumstances are known or unknown as of the Closing; and (iii) asserted or filed by all other employees, former employees or retired employees of the Fisher Entities or the Stations.

(j) Nothing contained herein, expressed or implied, is intended to confer upon any TBA Transferred Employee or any APA Transferred Employee any right to continued employment for any period of time by reason of this Agreement. Nothing contained herein is intended to confer upon any TBA Transferred Employee or any APA Transferred Employee any particular term or condition of employment.

Section 6.3 Control of Operations Prior to Closing Date. Notwithstanding anything contained herein or in the TBA to the contrary, the Closing shall not be consummated prior to the grant by the FCC of the FCC Consent. The Fisher Entities and Buyer acknowledge and agree that at all times commencing on the date hereof and ending on the Closing Date, except as set forth in and pursuant to the terms of the TBA, neither Buyer nor any of its employees, agents or representatives, directly or indirectly, shall, or have any right to, control, direct or otherwise supervise, or attempt to control, direct or otherwise supervise any of the management or operations of the Stations, it being understood that the operation, management, control and supervision of all programs, equipment, operations and other activities of the Stations shall be the sole responsibility, and at all times prior to the Closing Date remain within the complete control and discretion, of the Fisher Entities, subject to the terms of Section 5.4 of this Agreement and the provisions of the TBA.

Section 6.4 Non-Solicitation of Employees. Subject to the Fisher Entities’ right to rehire employees pursuant to Section 6.2(a), commencing with the TBA Effective Date and continuing for eighteen months after the Closing Date, each Fisher Entity and its Affiliates (each a “Covenantor”) shall not directly or indirectly, for itself or on behalf of any other individual or entity, hire or solicit any TBA Transferred Employee or any APA Transferred Employee who at the time of solicitation is known to the Covenantor to be an employee of Buyer or any of its Affiliates, or induce or attempt to induce through any form of direct communication any such TBA Transferred Employee or any APA Transferred Employee to leave his or her employment with any of the Buyer or any of its Affiliates who at the time of solicitation is known to the Covenantor to be an employee of Buyer or any of its Affiliates; provided, however, that this Section 6.4 shall not prohibit any Covenantor from making a general, public solicitation or a general industry-specific solicitation for employment, or from hiring any individual discharged by Buyer or any of its Affiliates.

Section 6.5 Termination of Certain Arrangements. Except as otherwise may be agreed by the parties in this Agreement or otherwise (including the post-closing arrangements contemplated by Schedule 3.26), Buyer and the Fisher Entities acknowledge and agree that any and all services provided by the Fisher Entities or any of their Affiliates to the Stations and any other arrangements between the Fisher Entities or their Affiliates and the Stations shall automatically be terminated effective as of the Closing without any additional actions by the parties, and that the Fisher Entities and their Affiliates, on the one hand, and the Stations, on the other, shall have no further obligations or liabilities to each other from and after the Closing.

Section 6.6 Public Filings. The Fisher Entities acknowledge that Buyer may be obligated to use the pre-Closing financial statements of the Fisher Entities and other information in connection with filings under the Securities Act of 1933, as amended, and the

Securities Exchange Act of 1934, as amended (the “Public Filings”), to be issued or filed by Buyer. For a period of three (3) years from the Closing Date, the Fisher Entities shall cooperate in a commercially reasonable manner with Buyer so that Buyer can obtain information sufficient for Buyer to prepare such Public Filings, in each case the out-of-pocket costs for which shall be borne solely by Buyer. The foregoing cooperation of the Fisher Entities shall include (i) with respect to the period of time that the Station, the Purchased Assets and the Business was owned or controlled by a Fisher Entity, compiling the requisite financial information, including supplying financial information for purposes of comfort letters to be issued in connection with Public Filings, (ii) granting Buyer and its accountants full and complete access to the books and records of Fisher Radio and to any personnel knowledgeable about such books and records (including the accountants of the Fisher Entities), in each case, to the extent reasonably requested by Buyer and (iii) with respect to the period of time that the Station, the Purchased Assets and the Business was owned or controlled by the Fisher Entities, signing customary management representation letters related to the financial statements and any comfort letters. With respect to matters described in clause (i), for periods prior to the time the Station was owned or controlled by the Fisher Entities, the Fisher Entities agree to provide all relevant financial information in their possession with respect to ¨such periods, to contact the former owners of the Station on behalf of Buyer and to assist Buyer in arranging access to financial information of such former owners.

Section 6.7 Bulk Sales Act. The Fisher Entities agree to jointly and severally indemnify, defend, and hold Buyer harmless against any claims, liabilities, costs, or expenses, including reasonable attorneys’ fees, that Buyer may incur as a result of the failure to comply with the bulk sales provisions of the Uniform Commercial Code or similar laws with respect to the transactions contemplated hereby.

ARTICLE 7.

CONDITIONS PRECEDENT TO OBLIGATIONS

THE FISHER ENTITIES

The obligations of the Fisher Entities under this Agreement to consummate the Closing shall, at the option of the Fisher Entities, be subject to the satisfaction, on or prior to the Closing Date, of the following conditions:

Section 7.1 No Misrepresentation or Breach of Covenants and Warranties.

(a) There shall have been no material breach by Buyer in the performance of any of its respective covenants and agreements contained herein to be performed prior to the Closing that remains uncured as of the Closing.

(b) Each of the representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects (without regard to any materiality limitation contained in any representation or warranty) on the Closing Date as though made on the Closing Date (except to the extent that they expressly speak as of a specific date or time other

than the Closing Date, in which case they need only have been true and correct in all material respects as of such specified date or time).

(c) Buyer shall have delivered to the Fisher Entities certificates, dated as of the Closing Date and signed on behalf of Buyer by its President or any Vice President, certifying that the conditions described in subsections (a) and (b) above have been satisfied.

Section 7.2 No Restraint or Litigation.

(a) There shall not be in effect any preliminary or permanent injunction or other order, decree or ruling by a court of competent jurisdiction or by a Governmental Body, no statute, rule, regulation or executive order shall have been promulgated or enacted by a Governmental Body, and there shall not be in effect any temporary restraining order of a court of competent jurisdiction, which, in any case, restrains or prohibits the transactions contemplated hereby.

(b) There shall not be in existence any suit, action, proceeding or investigation instigated by a Governmental Body before any court or governmental agency or body to prohibit the transactions contemplated by this Agreement; provided, however, that this condition may not be invoked by the Fisher Entities if any such action, suit, or proceeding was solicited or encouraged by, or instituted as a result of any act or omission of, the Fisher Entities in breach of this Agreement.

Section 7.3 FCC Consent. The FCC Consent shall have been granted without any condition or qualification that is materially adverse to the Fisher Entities, except those that are customary in the assignment of AM and FM licenses and any condition imposed by reason of actions constituting a material breach of Fisher Entities’ representations, warranties, covenants and obligations hereunder.

Section 7.4 Payment. Buyer shall have delivered the Purchase Price to the Fisher Entities in accordance with Section 2.7.

Section 7.5 Closing Documents. Buyer shall have delivered to the Fisher Entities all of the closing documents specified in Section 2.8(b), all of which documents shall be dated as of the Closing Date, duly executed, and in a form customary in transactions of this type and reasonably acceptable to the Fisher Entities.

Notwithstanding the failure of any one or more of the foregoing conditions, to the extent permitted by law, the Fisher Entities may proceed with the Closing without satisfaction, in whole or in part, of any one or more of such conditions and without written waiver; provided, that Closing shall be deemed a waiver of only such conditions.

ARTICLE 8.

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

The obligations of Buyer under this Agreement to consummate the Closing shall, at the option of Buyer, be subject to the satisfaction on or prior to the Closing Date, of the following conditions:

Section 8.1 No Misrepresentation or Breach of Covenants and Warranties.

(a) There shall have been no breach by the Fisher Entities in the performance of any of their covenants and agreements contained herein to be performed prior to the Closing that remains uncured as of the Closing except to the extent any such breach does not, individually or in the aggregate, have a Material Adverse Effect.

(b) Each of the representations and warranties of the Fisher Entities contained in this Agreement shall be true and correct in all respects (without regard to any materiality limitation contained in any representation or warranty) on the Closing Date as though made on the Closing Date (except to the extent that they expressly speak as of a specific date or time other than the Closing Date, in which case they need only have been true and correct in all respects as of such specified date or time) except to the extent any failure of such representation or warranty to be true and correct does not, individually or in the aggregate, have a Material Adverse Effect.

(c) The Fisher Entities shall have delivered to Buyer certificates, dated as of the Closing Date and signed on behalf of the Fisher Entities by their President or any Vice President, certifying that the conditions described in subsections (a) and (b) above have been satisfied.

Section 8.2 No Restraint or Litigation.

(b) There shall not be in existence any suit, action, proceeding or investigation instigated by a Governmental Body before any court or governmental agency or body to prohibit the transactions contemplated by this Agreement; provided, however, that this condition may not be invoked by Buyer if any such action, suit, or proceeding was solicited or encouraged by, or instituted as a result of any act or omission of, Buyer in breach of this Agreement.

Section 8.3 FCC Consent. The FCC Consent shall have been granted without any condition or qualification that is materially adverse to Buyer or to the operations of the Stations and no objection, opposition or other filing raising issues concerning the Transfer Application which, in the reasonable judgment of Buyer’s FCC counsel, could lead to denial or designation for hearing of the Transfer Application or to the imposition of any condition or

qualification materially adverse to the operation of either or both of the Stations (a “Transfer Opposition”) shall have been filed. In the event a Transfer Opposition has been filed, then the FCC Consent shall have become a Final Order.

Section 8.4 FCC Licenses. On the Closing Date, Fisher Radio shall be the lawful holder of the FCC Licenses issued by the FCC, the FCC Licenses shall be in full force and effect, in accordance with their terms, and with respect to the FCC Licenses, the balance of the current license term shall be that applicable generally to radio broadcast stations licensed to communities in the state where the Station in question is located.

Section 8.5 Closing Documents. The Fisher Entities shall have delivered to Buyer all of the closing documents specified in Section 2.8(a), all of which documents shall be dated as of the Closing Date, duly executed, and in a form customary in transactions of this type and reasonably acceptable to Buyer.

Section 8.6 Third Party Consents. The Fisher Entities shall have obtained all consents required under the Material Station Agreements in connection with the consummation of the Transaction (a “Required Consent”), such that after the Closing the Buyer will continue to enjoy all of its rights and privileges under the Material Station Agreements, subject only to the same obligations as are binding thereunder, on terms and conditions that are no less favorable in any material respect than those contained in such Material Station Agreements on the date of this Agreement (as it may be modified prior to the Closing in accordance with the provisions of this Agreement or the TBA).

Section 8.7 Satisfactory Environmental Assessment. To the extent that the Environmental Assessment or confirmatory testing conducted pursuant to Section 5.6 hereof reflects the existence of any recognized environmental conditions, then (i) the Fisher Entities shall have completed the remediation of such conditions in accordance with Section 5.6 hereof or (ii) Buyer shall have provided notice to the Fisher Entities of Buyer’s election to proceed to Closing with the adjustment to the Purchase Price specified in Section 5.6 hereof (provided that Buyer shall be deemed to have provided such notice if it does not exercise its right to terminate this Agreement in accordance with Section 5.6 by the dates specified therein).

Section 8.8 Title Commitments. Buyer shall have received the Title Commitments.

Notwithstanding the failure of any one or more of the foregoing conditions, to the extent permitted by law, Buyer may proceed with the Closing without satisfaction, in whole or in part, of any one or more of such conditions and without written waiver; provided, that Closing shall be deemed a waiver of only such conditions.

Section 8.9 Access Easements. Buyer shall have received evidence that all Access Easements exist and are duly recorded.

ARTICLE 9.

INDEMNIFICATION

Section 9.1 Indemnification by Fisher Entities. The Fisher Entities agree jointly and severally to indemnify and hold harmless Buyer from and against any and all Losses and Expenses incurred by Buyer in connection with or arising from:

(i) any breach by the Fisher Entities of, or any other failure of the Fisher Entities to perform, any of their covenants, agreements or obligations in this Agreement or in any Fisher Ancillary Agreement;

(ii) any breach of any warranty or the inaccuracy of any representation of the Fisher Entities contained in this Agreement or any certificate delivered by or on behalf of the Fisher Entities pursuant hereto; provided, that with respect to the indemnification provisions of this Article 9 only, in the case of any representation or warranty in Section 3.10 or 3.22 herein that is subject to the Knowledge of the Fisher Entities (the “Knowledge Qualification”), compliance with and the accuracy of such representation or warranty shall be determined without regard to the Knowledge Qualification and, in the event of a breach or inaccuracy thereof, (a) if within the Knowledge of the Fisher Entities at or before Closing, the Fisher Entities shall indemnify and hold harmless Buyer from and against any and all Losses and Expenses incurred by Buyer in connection with or arising from such breach or inaccuracy and (b) if not within the Knowledge of the Fisher Entities at or before Closing, the obligation of the Fisher Entities to indemnify and hold harmless Buyer in connection with such breach or inaccuracy shall be limited to Buyer’s reasonable direct damages as a result of such breach or inaccuracy (including penalties, fines and third party claims but excluding, without limitation, lost profits) or in curing such breach or inaccuracy and Buyer’s reasonable attorneys’ fees incurred in connection therewith or arising therefrom, including, without limitation, in enforcing its rights to indemnification, in effecting any related remediation, and in enforcing or defending any related claims;

(iii) any Encumbrances on the Purchased Assets except for Permitted Encumbrances;

(iv) any Administrative Violation or alleged Administrative Violation of the Fisher Entities occurring prior to the Closing Date (except to the extent caused by Buyer’s actions under the TBA);

(v) the litigation described on Schedule 3.19;

(vi) the Excluded Liabilities;

(vii) any actions of the Fisher Entities or their Affiliates, their employees, contractors or agents (including their negligence) in performing or failing to perform any of their obligations under the TBA;

(viii) any and all obligations of the Fisher Entities to, or claims for payment of fees or commissions by, Kalil & Co., Inc. or any of its employees, agents or Affiliates that arise in connection with the transactions contemplated by this Agreement; and

(ix) termination of any of the contracts listed in Schedule 9.1(ix) (the “Schedule 9.1(ix) Contracts”); provided, however, that the Fisher Entities’ obligations pursuant to this Section 9.1(ix) with respect to any contractual compensation remaining to be paid for the balance of the applicable Schedule 9.1(ix) Contract shall be limited to one-half of the total amount of such compensation paid by or agreed to be paid by Buyer.

Section 9.2 Indemnification by Buyer. The Buyer agrees to indemnify and hold harmless the Fisher Entities from and against any and all Losses or Expenses incurred by the Fisher Entities in connection with or arising from:

(i) any breach by Buyer, or any other failure of Buyer to perform, any of its covenants, agreements or obligations in this Agreement or in any Buyer Ancillary Agreement;

(ii) any breach of any warranty or the inaccuracy of any representation of Buyer contained in this Agreement or any certificate delivered by or on behalf of Buyer pursuant hereto;

(iii) the failure of Buyer to perform any of the Assumed Liabilities, Buyer’s (or any successor’s or assignee’s) operation of the Stations and conduct of the Business and/or the ownership and/or use of the Purchased Assets after the Closing;

(iv) any action or failure of Buyer to perform of discharge its obligations under the TBA; and

(v) termination of the Schedule 3.16 Contract, only if such contract is not assumed by Buyer pursuant to Section 6.2(a); provided, however, that Buyer’s obligations pursuant to this Section 9.2(v) with respect to any contractual compensation remaining to be paid for the balance of the Schedule 3.16 Contract shall be limited to one-half of the total amount of such compensation paid or agreed to be paid by the Fisher Entities only through December 31, 2003.

Section 9.3 Additional Indemnification Matters; Notice of Claims.

(a) Notwithstanding anything in this Agreement to the contrary, the Fisher Entities’ obligation to indemnify and hold harmless Buyer for Losses and Expenses incurred by Buyer in connection with or arising from the Excluded Liabilities set forth in Section 2.3(b)(iv) shall be limited to Buyer’s reasonable direct damages in remediation (including penalties, fines and third party claims but excluding, without limitation, lost profits) of such Excluded Liabilities and Buyer’s reasonable attorneys’ fees incurred in connection with, or arising from, such

Excluded Liabilities, including without limitation, in enforcing its rights to indemnification, in effecting any related remediation, and in enforcing or defending any related claims. The aggregate amount that (i) the Fisher Entities shall be required to indemnify and hold harmless Buyer pursuant to the foregoing and clause (a)(ii) of Section 9.1 and (ii) Buyer shall be required to indemnify and hold harmless the Fisher Entities pursuant to clause (ii) of Section 9.2 shall not exceed Five Million Dollars ($5,000,000.00). The Fisher Entities shall have no obligation to indemnify Buyer with respect to clause (ii) of Section 9.1 and Buyer shall have no obligation to indemnify the Fisher Entities with respect to clause (ii) of Section 9.2 unless and until, in either case, the aggregate amount of Losses and Expenses arising in conjunction therewith exceeds One Hundred Thousand Dollars ($100,000.00), in which event the indemnifying party (the “Indemnitor”) shall be required to indemnify the other party (the “Indemnified Party”) for the full amount of any Losses and Expenses incurred by the Indemnified Party. In determining whether a party shall be obligated to indemnify the other party under this Article 9, each representation and warranty and each covenant contained in this Agreement with respect to which indemnity may be sought hereunder shall be read solely for purposes of determining whether a breach of such representation, warranty or covenant has occurred without regard to materiality qualifications (including Material Adverse Effect) that may be contained therein. The indemnity set forth herein is intended by the parties to cover all acts, suits, proceedings, claims, demands, assessments, adjustments, diminution in value, costs, and expenses with respect to any and all of the specific matters in this indemnity set forth.

(b) An Indemnified Party seeking indemnification hereunder shall give promptly to the Indemnitor a written notice (a “Claim Notice”) describing in reasonable detail the facts giving rise to the claim for indemnification hereunder and shall include in such Claim Notice (if then known or estimable) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based. The failure of any Indemnified Party to give the Claim Notice promptly as required by this Section 9.3 shall not affect such Indemnified Party’s rights under this Article 9 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

(c) After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Article 9 shall be determined: (i) by the written agreement between the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any court of competent jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor shall agree in writing. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. The Indemnified Party shall have the burden of proof in establishing the amount of Losses and Expenses suffered by it.

Section 9.4 Third Person Claims.

(a) In order for a party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any third Person against the Indemnified Party, including without limitation any enforcement action

any federal, state or local government agency, such Indemnified Party must notify the Indemnitor in writing, and in reasonable detail, of the third Person claim promptly after receipt by such Indemnified Party of written notice of the third Person claim. Thereafter, the Indemnified Party shall promptly deliver to the Indemnitor copies of all notices and documents (including court papers) received by the Indemnified Party relating to the third Person claim. Notwithstanding the foregoing, should a party be physically served with a complaint with regard to a third Person claim, the Indemnified Party must notify the Indemnitor with a copy of the complaint promptly after receipt thereof and shall deliver to the Indemnitor promptly after the receipt of such complaint copies of notices and documents (including court papers) physically served upon the Indemnified Party relating to the third Person claim. The failure of any Indemnified Party to give the Claim Notice promptly or to deliver copies of notices and documents as required by this Section 9.4 shall not affect such Indemnified Party’s rights under this Article 9 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

(b) In the event of the initiation of any legal proceeding against the Indemnified Party by a third Person, including without limitation any enforcement action any federal , state or local government agency, the Indemnitor shall have the sole and absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice and to control, defend against, negotiate, settle or otherwise deal with any proceeding, claim, or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that, the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnified Party defends against or otherwise deals with any such proceeding, claim or demand, the Indemnified Party may retain counsel, reasonably acceptable to the Indemnitor, at the expense of the Indemnitor, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnified Party may settle any such proceeding which settlement obligates the other party to pay money, to perform obligations or to admit liability without the consent of the other party, such consent not to be unreasonably withheld. After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall arrive at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor shall pay all of the sums so owing to the Indemnified Party by wire transfer, certified or bank cashier’s check within thirty (30) days after the date of such notice.

Section 9.5 Treatment of Indemnity Payments. All payments under this Article 9 shall be treated for income tax purposes as adjustments to the Purchase Price.

Section 9.6 Limitations.

(a) In any case where an Indemnified Party recovers from third Persons any amount in respect of a matter with respect to which an Indemnitor has indemnified it pursuant to this Article 9, such Indemnified Party shall promptly pay over to the Indemnitor the amount so recovered (after deducting therefrom the full amount of the expenses incurred by it in procuring such recovery), but not in excess of any amount previously so paid by the Indemnitor to or on behalf of the Indemnified Party in respect of such matter.

(b) Except in claims of common law fraud or except for remedies that cannot be waived as a matter of law and injunctive and provisional relief, if the Closing occurs, this Article 9 shall be the exclusive remedy for breaches of any representation or warranty contained in this Agreement.

ARTICLE 10.

TERMINATION AND REMEDIES

Section 10.1 Termination.

(a) Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Closing:

(i) by the mutual written consent of the Fisher Entities and Buyer;

(ii) provided that the Fisher Entities are not then in material breach of this Agreement, by written notice from the Fisher Entities in the event of a material breach by Buyer of any of its covenants, agreements, representations or warranties contained in this Agreement or if any of the representations or warranties of Buyer contained in this Agreement shall have been inaccurate in any material respect when made, and the failure of Buyer to cure such breach within thirty (30) days after receipt of written notice from the Fisher Entities requesting such breach to be cured, and provided that the failure to cure such breach would result in the conditions contained in Section 7.1 not being satisfied;

(iii) provided that Buyer is not then in material breach of this Agreement, by written notice from Buyer in the event of a material breach by the Fisher Entities of any of their respective covenants, agreements, representations or warranties contained in this Agreement (other than such breaches resulting solely from Buyer’s actions under the TBA or Buyer’s failure to perform or discharge its obligations as required by the TBA) or if any of the representations or warranties of the Fisher Entities contained in this Agreement shall have been inaccurate in any material respect when made, and the failure of the Fisher Entities, as the case may be, to cure such breach within thirty (30) days after receipt of written notice from Buyer requesting such breach to be cured, and provided that the failure to cure such breach would result in the conditions contained in Section 8.1 not being satisfied;

(iv) (a) by written notice from Buyer if any court of competent jurisdiction in the United States or other United States Governmental Body shall have issued a final and non-appealable order, decree or ruling (other than any such order, decree or ruling arising from or in connection with a Transfer Restraint) permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; or (b) by written notice from the Fisher Entities if any court of competent jurisdiction in the United States or other United States Governmental Body shall have issued a final and non-appealable order, decree or ruling (other than any such order, decree or ruling arising from or in connection with the actions of the Fisher Entities) permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(v) by written notice from Buyer, pursuant to the provisions of Section 5.6 hereof;

(vi) by written notice from Buyer, pursuant to the provisions of Section 11.12 hereof;

(vii) by written notice from the Fisher Entities or Buyer if the Closing shall not have occurred on or before June 30, 2004 (or such later date as may be mutually agreed to by the Fisher Entities and Buyer), in which event the TBA shall terminate simultaneously with this Agreement; provided, however, that the right to terminate this Agreement under this Section 10.1(a)(vii) shall not be available to any party whose failure to fulfill any obligation under this Agreement or the TBA shall have been the cause of, or resulted in, the failure of the Closing to occur prior to such date;

(viii) by written notice from the Fisher Entities, pursuant to the provisions of Section 5.8(a) hereof;

(ix) by written notice from the Fisher Entities or Buyer, if the Fisher Board Approval is not obtained prior to 5:00 p.m. PDT on June 4, 2003;

(x) by written notice from the Fisher Entities, pursuant to the provisions of Section 5.8(d) hereof.; and

(xi) by written notice from the Fisher Entities or Buyer if the Transfer Application is designated for hearing.

(b) In the event that this Agreement is terminated pursuant to this Article 10, all further obligations of the parties under this Agreement (other than the provisions of Sections 2.5, 6.2(a), 6.4, this Article 10, and Sections 11.2, 11.9 and 11.15) shall be terminated without further liability of any party to the other, except that notwithstanding the foregoing each party shall remain liable to the other party hereto for any breach of its obligations under this Agreement prior to such termination.

Section 10.2 Fisher Entities’ Remedies.

(a) If this Agreement is terminated by the Fisher Entities (other than pursuant to Section 10.1(a)(ix)), or if the Closing has not occurred and, in either case, Section 2.5(c) applies, then Buyer shall pay to the Fisher Entities Two Million Two Hundred Thousand Dollars ($2,200,000) (the “Liquidated Damages Amount”).

(b) If this Agreement is terminated by either party and Section 2.5(d) applies, then Buyer shall pay to the Fisher Entities One Million One Hundred Thousand Dollars ($1,100,000) (the “Regulatory Termination Fee”).

(c) In the event of any such termination, the Liquidated Damages Amount or the Regulatory Termination Fee, as the case may be, shall be liquidated damages and not a penalty and shall constitute full payment and the exclusive remedy for any damages, costs or expenses sustained by the Fisher Entities as a result of such termination. The Fisher Entities shall be entitled to collect the Liquidated Damages Amount or the Regulatory Termination Fee, as the case may be, by receiving a disbursement of the Deposit held by the Escrow Agent pursuant to the Escrow Agreement. The Fisher Entities and Buyer agree in advance that actual damages, costs or expenses would be difficult to ascertain and that the Liquidated Damages Amount or the Regulatory Termination Fee, as the case may be, is a fair and equitable amount to reimburse the Fisher Entities for damages sustained due to Buyer’s breach of this Agreement or for costs and expenses sustained due to the termination of this Agreement described in Section 10.2(b) and is not a penalty in either case.

Section 10.3 Buyer’s Remedies.

(a) If this Agreement is terminated pursuant to Section 10.1(a)(ix), and Buyer is not then in material breach of this Agreement, then the Fisher Entities shall pay to Buyer Five Hundred Thousand Dollars ($500,000).

(b) If this Agreement is terminated pursuant to Section 10.1(a)(ix), and within five years after such termination the Fisher Entities or their Affiliates sell the Stations to a third party for a purchase price in excess of the Purchase Price, then upon consummation of such sale to such third party, the Fisher Entities shall pay to Buyer the amount of such excess.

(c) In the event of any such termination, the amounts payable by the Fisher Entities pursuant to Sections 10.3(a) and 10.3(b), as the case may be, shall be liquidated damages and not a penalty and shall constitute full payment and the exclusive remedy for any damages, costs or expenses sustained by Buyer as a result of such termination. The Fisher Entities and Buyer agree in advance that actual damages, costs or expenses would be difficult to ascertain and that the amounts payable by the Fisher Entities pursuant to Sections 10.3(a) and 10.3(b), as the case may be, are fair and equitable amounts to reimburse Buyer for damages, costs and expenses sustained due to the termination of this Agreement described in Section 10.1(a)(ix) and is not a penalty in either case.

(d) The parties recognize that if, prior to Closing, the Fisher Entities breach this Agreement and refuse to perform under the provisions of this Agreement, monetary damages

alone would not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled, in addition to any other remedies that may be available, to obtain specific performance of the terms of this Agreement prior to Closing. If any action is brought by Buyer to enforce this Agreement, whether prior to or following the Closing, the Fisher Entities shall waive the defense in any such action that there is an adequate remedy at law and interpose no opposition, legal or otherwise, as to the propriety of specific performance as a remedy hereunder, and the Fisher Entities agree that Buyer shall have the right to seek specific performance without being required to prove actual damages, post bond, furnish other security, or make an election of remedies. Following the Closing, Buyer shall be entitled, in addition to any other remedies that may be available, to seek specific performance of the terms of this Agreement to be performed after the Closing. In the event Buyer elects to terminate this Agreement as a result of Fisher Entities’ default hereunder instead of seeking specific performance, Buyer shall be entitled to recover Buyer’s damages.

ARTICLE 11.

GENERAL PROVISIONS

Section 11.1 Survival of Representations, Warranties and Obligations. All representations, warranties, covenants and obligations contained in this Agreement shall survive the consummation of the transactions contemplated by this Agreement; provided, however, that, except as otherwise provided in Article 9, the representations and warranties contained in Articles 3 and 4 of this Agreement shall terminate 18 months after the Closing Date. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, (a) the representations and warranties contained in Sections 3.6, 3.21, and 3.22 shall survive for the full period of any applicable statute of limitations plus sixty (60) days, and (b) the representations and warranties contained in Sections 3.2 and 3.14 and 4.2 shall survive without limitation. Except as otherwise provided herein, no claim shall be made for the breach of any representation or warranty contained in Article 3 or 4 after the date on which such representations and warranties terminate as set forth in this Section 11.1.

Section 11.2 Confidential Nature of Information. Each party agrees that it will treat in confidence all documents, materials and other information which it shall have obtained regarding the other party during the course of the negotiations leading to the consummation of the transactions contemplated hereby (whether obtained before or after the date of this Agreement), the investigation provided for herein, under the TBA, and the preparation of this Agreement and other related documents, and, in the event the transactions contemplated hereby shall not be consummated, each party will return to the other party all copies of nonpublic documents and materials which have been furnished in connection therewith and will not, thereafter, use any confidential information contained therein. Without limiting the right of either party to pursue all other legal and equitable rights available to it for violation of this Section 11.2 by the other party, it is agreed that other remedies cannot fully compensate the aggrieved party for such a violation of this Section 11.2 and that the aggrieved party shall be entitled to injunctive relief to prevent a violation or continuing violation hereof. Notwithstanding anything to the contrary set forth herein or in any other written or oral understanding or agreement to which the parties hereto are parties or by which they are bound, the parties acknowledge and agree that (i) any obligations of confidentiality contained herein and

therein do not apply and have not applied from the commencement of discussions between the parties to the tax treatment and tax structure of the transactions contemplated hereby (and any related transactions or arrangements) (the “Transactions”), and (ii) each party (and each of its employees, representatives, or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, all within the meaning of Treasury Regulations Section 1.6011-4; provided, however, that each party recognizes that the privilege each has to maintain, in its sole discretion, the confidentiality of a communication relating to the Transactions, including a confidential communication with its attorney or a confidential communication with a federally authorized tax practitioner under Section 7525 of the Code, is not intended to be affected by the foregoing.

Section 11.3 Governing Law; Venue. This Agreement and the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Washington without reference to its choice of law rules.

Section 11.4 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered when delivered personally or by messenger or 72 hours after having been sent by registered or certified mail or when delivered by private courier addressed as follows:

If to the Fisher Entities:

Fisher Broadcasting Company

600 University Street, Suite 1525

Seattle, Washington 98101

Attention: Benjamin W. Tucker

with a copy to:

Graham & Dunn PC

Pier 70

2801 Alaskan Way—Suite 300

Seattle, Washington 98121-1128

Attention: Jack G. Strother

If to Buyer, to:

Entercom Communications Corp.

401 City Avenue

Suite 809

Bala Cynwyd, Pennsylvania 19004

Attention: David Field

with a copy to:

Latham & Watkins LLP

555 Eleventh Street, N.W.

Suite 1000

Washington, D.C. 20004

Attn: Joseph D. Sullivan

or to such other address as such party may indicate by a notice delivered to the other parties hereto.

Section 11.5 Assignment; Successors and Assigns.

(a) The rights and obligations of any party under this Agreement shall not be assignable or delegable by such party hereto without the written consent of the other parties hereto. Notwithstanding the foregoing, any party may, without the consent of the other parties, (i) assign its rights under this Agreement to any of its Affiliates and (ii) make a collateral assignment of its rights under this Agreement for the benefit of its lenders.

(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the parties and successors and assigns permitted by this Section 11.5 any right, remedy or claim under or by reason of this Agreement.

Section 11.6 Entire Agreement; Amendments. This Agreement, the Exhibits and Schedules referred to herein, the TBA and the other documents delivered pursuant hereto contain the entire understanding of the parties hereto with regard to the subject matter contained herein or therein, and supersede all prior agreements, understandings or intents between or among any of the parties hereto. The parties hereto, by mutual agreement in writing, may amend, modify and supplement this Agreement.

Section 11.7 Interpretation. Article titles and headings to sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. As used in this Agreement, the word “including” is not limiting, and the word “or” is not exclusive.

Section 11.8 Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

Section 11.9 Expenses. Except as otherwise expressly provided herein or in the TBA, the Fisher Entities and Buyer will each pay all of its own respective costs and expenses incident to its negotiation and preparation of this Agreement and the TBA and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel and accountants.

Section 11.10 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein unless the deletion of such provision or provisions would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable.

Section 11.11 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the parties and delivered to each of the parties.

Section 11.12 Risk of Loss; Damage to Facilities.

(a) Subject to the TBA, the risk of loss or damage to the Purchased Assets shall be on the Fisher Entities prior to the Closing and thereafter shall be on Buyer. Notwithstanding anything in this Agreement to the contrary, including, without limitation, Section 9.1, if any material portion of the Purchased Assets is destroyed or damaged on or prior to the Closing (the “Damaged Assets”), the Fisher Entities shall give written notice to Buyer as soon as practicable thereafter, but in any event within five (5) calendar days of discovery of such damage or destruction. The Fisher Entities shall promptly repair or replace the Damaged Assets; provided, however, that if such repair or replacement cannot be completed prior to the scheduled Closing Date, the parties shall postpone the Closing Date for such time as is reasonably necessary for the completion of such repair or replacement without regard to the date specified in Section 10.1(a)(vii); provided, further, that the Fisher Entities shall not be obligated to expend in the aggregate in excess of One Million Dollars ($1,000,000) (the “Damaged Asset Cap”) to effect such repair or replacement. If the aggregate amount of the repair or replacement cost of the Damaged Assets exceeds the Damaged Asset Cap, the Fisher Entities may elect not to repair or replace the Damaged Assets and shall promptly notify Buyer of such election. In such event, Buyer shall have the option, which shall be exercised by written notice to the Fisher Entities within twenty (20) calendar days after receipt of the Fisher Entities’ notice or if there are not twenty (20) calendar days prior to the Closing Date, as soon as practicable prior to the Closing Date, of (a) accepting the Damaged Assets in their destroyed or damaged condition, in which event Buyer shall be entitled to receive a reduction in the Purchase Price at Closing equal to One Million Dollars ($1,000,000), or (b) terminating this Agreement. In the event that the Closing Date is postponed pursuant to this Section 11.12 beyond the date specified in Section 10.1(a)(vii), the parties shall amend the Transfer Application to request an extension of the date of Closing.

(b) The Fisher Entities shall give prompt written notice to Buyer if a Specified Event occurs. A “Specified Event” means the interruption of the broadcast transmission in the normal and usual manner of any of the Stations (other than any interruption resulting from Buyer’s actions under the TBA or Buyer’s failure to perform or discharge its obligations as required by the TBA) for (i) a period of five (5) or more consecutive days or (ii) fourteen (14) or more periods of 24 consecutive hours. If a Specified Event occurs, then the Fisher Entities shall, at their expense (except as provided in the last sentence of this paragraph 11.12(b)), promptly remedy the condition(s) giving rise to the Specified Event within five (5) Business Days following the occurrence of the Specified Event. If the Fisher Entities do not remedy such conditions within such five (5) Business Days, Buyer may terminate this Agreement. Buyer shall exercise its best efforts, including making its Station employees available to the Fisher Entities, to assist and cooperate with the Fisher Entities in effecting the remedy of the condition(s) giving rise to the Specified Event.

Section 11.13 No Third Party Beneficiaries. The Fisher Entities and Buyer do not intend by the execution, delivery or performance of this Agreement to confer a benefit upon any Person not a party to this Agreement.

Section 11.14 Attorneys’ Fees. If either party initiates any litigation against the other party involving this Agreement, the prevailing party in such action shall be entitled to receive reimbursement from the other party for all reasonable attorneys’ fees and other costs and expenses incurred by the prevailing party in respect of that litigation, including any appeal, and such reimbursement may be included in the judgment or final order issued in that proceeding.

Section 11.15 Hiring of Employees. If Closing fails to occur for any reason, then for 18 months following termination of this Agreement, (i) Buyer shall not offer employment to or hire any employees listed on Schedule 6.2 or any other individual who was an employee of Buyer but becomes an employee of the Fisher Entities as a result of termination of the TBA whose employment relates to the Business or any of the Stations, and (ii) Buyer shall not offer employment to or hire any employee Buyer whose employment relates to the Business or any of the Stations. If the TBA fails for any reason to become effective, Buyer shall not offer employment to or hire any employees of the Fisher Entities whose employment relates to the Business or any of the Stations until the earlier of Closing or 18 months following termination of this Agreement. The foregoing restrictions shall not prohibit Buyer or the Fisher Entities from making a general, public solicitation or a general industry-specific solicitation for employment or from hiring any individual discharged by Buyer or the Fisher Entities.

Section 11.16 Actions Pursuant to the TBA. Notwithstanding anything contained herein to the contrary, the Fisher Entities shall not be deemed to have breached any of their representations, warranties, covenants or agreements contained herein or to have failed to satisfy any condition precedent to Buyer’s obligation to perform under this Agreement (nor shall the Fisher Entities have any liability or responsibility to Buyer in respect of any such representations, warranties, covenants, agreements or conditions precedent), in each case to the extent that the inaccuracy of any such representation, the breach of any such warranty, covenant or agreement or the inability to satisfy any such condition precedent is due to (i) any actions taken by or at the direction of Buyer or its Affiliates (or any of their respective officers, directors,

employees, agents or representatives) in connection with Buyer’s performance of its obligations under the TBA, or (ii) the failure of Buyer to perform any of its obligations under the TBA. Buyer acknowledges and agrees that the Fisher Entities shall not be deemed responsible for or have authorized or consented to any action or failure to act on the part of Buyer of its Affiliates (or any of their respective officers, directors, employees, agents or representatives) in connection with the TBA solely by reason of the fact that prior to Closing, Fisher Radio shall have the legal right to control, manage and supervise the operation of the Stations and the conduct of the Business, except to the extent the Fisher Entities actually exercise any control, management or supervision of the operation of the Stations or the conduct of the Business.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this ASSET PURCHASE AGREEMENT to be executed as of the day and year first above written.

FISHER BROADCASTING COMPANY

By:		/s/ David D. Hillard
		Name: David D. Hillard
		Title: Assistant Secretary

FISHER BROADCASTING – PORTLAND RADIO, L.L.C.

By Fisher Broadcasting Company, Its Manager

By:		/s/ David D. Hillard
		Name: David D. Hillard
		Title: Assistant Secretary

ENTERCOM PORTLAND, LLC

By:		/s/ John C. Donlevie
		Name: John C. Donlevie
		Title: Executive Vice President

ENTERCOM PORTLAND LICENSE, LLC

By:		John C. Donlevie
		Name: John C. Donlevie
		Title: Executive Vice President

EX-10.1 4 dex101.htm SECOND AMENDMENT TO CREDIT AGREEMENT DATED AS OF JUNE 27, 2003 Second Amendment To Credit Agreement dated as of June 27, 2003

Exhibit 10.1

SECOND AMENDMENT TO

CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of June 27, 2003, is by and among FISHER BROADCASTING COMPANY (the “Borrower”), certain Subsidiaries of the Borrower (the “Guarantors”), the Lenders that agree to the terms hereof and WACHOVIA BANK, NATIONAL ASSOCIATION (successor to First Union National Bank) (“Wachovia”), in its capacity as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”), BANK OF AMERICA, N.A. and THE BANK OF NEW YORK, as co-syndication agents for the Lenders hereunder (in such capacity, the “Co-Syndication Agents”), and NATIONAL CITY BANK, as documentation agent for the Lenders hereunder (in such capacity, the “Documentation Agent”). Capitalized terms used herein without definition shall have the meanings given to them in that certain Credit Agreement described below.

W I T N E S S E T H

WHEREAS, the Borrower, the Guarantors, the Lenders party thereto, the Administrative Agent, the Co-Syndication Agents and the Documentation Agent have entered into that certain Credit Agreement dated as of March 21, 2002 (as previously amended or modified and as further amended, modified, supplemented or restated from time to time, the “Credit Agreement”);

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement; and

WHEREAS, the Required Lenders have agreed to such amendments subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT

1.1 Amendment to Pricing Grid. The pricing grid set forth in the definition of “Applicable Percentage” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

Level

Leverage Ratio

Alternate Base Rate
Margin for
Revolving Loans and
Tranche A Term
Loans

LIBOR Rate Margin

for Revolving
Loans, Tranche A
Term Loans and
Letter of Credit Fee

Alternate Base
Rate Margin
for

Tranche B
Term Loans

LIBOR Rate
Margin

for Tranche B
Term Loans

Commitment
Fee

> 6.0 to 1.0

3.00

4.25

3.50

4.75

0.625

> 5.5 to 1.0 but < 6.0 to 1.0

2.75

4.00

3.25

4.50

0.625

III

> 5.0 to 1.0 but < 5.5 to 1.0

2.75

4.00

3.25

4.50

0.625

> 4.5 to 1.0 but < 5.0 to 1.0

2.00

3.25

4.50

0.500

> 4.0 to 1.0 but < 4.5 to 1.0

1.75

3.00

3.25

4.50

0.500

> 3.5 to 1.0 but < 4.0 to 1.0

1.50

2.75

3.25

4.50

0.500

VII

> 3.0 to 1.0 but < 3.5 to 1.0

1.25

2.50

3.25

4.50

0.375

VIII

> 2.5 to 1.0 but < 3.0 to 1.0

1.00

2.25

2.75

4.00

0.375

< 2.5 to 1.0

0.75

2.00

2.75

4.00

0.375

The Credit Parties and the Lenders acknowledge and agree that the foregoing modifications to the pricing grid will become effective on the Second Amendment Effective Date and the amended interest rate levels set forth in such pricing grid shall apply to all Loans outstanding as of such date as well as any Loan made after such date.

1.2 Amendment to Definition of Consolidated EBITDA. The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Consolidated EBITDA” shall mean, as of any date of determination for the four quarter period ending on such date, (i) Consolidated Net Income for such period plus (ii) the sum of the following to the extent deducted in calculating Consolidated Net Income: (A) Consolidated Interest Expense for such period, (B) tax expense (including, without limitation, any federal, state, local and foreign income, value added and similar taxes) of the Borrower and its Subsidiaries for such period and (C) depreciation, amortization (including Programming Amortization Expense) and other non-cash charges for such period minus (iii) Programming Cash Payments minus (iv) Upfront Radio Broadcasting Payments for such period; provided that, for purposes of calculating Consolidated EBITDA, South West Oregon Television Broadcast Corporation, the owner of the KPIC-TV license, shall be considered a Subsidiary of the Borrower and 50% of each of the foregoing components of Consolidated EBITDA (e.g. Consolidated Net Income) with respect to South West Oregon Television Broadcast Corporation shall be included in such calculation for the applicable period. The applicable period shall be for the four consecutive quarters ending as of the date of computation.

1.3 New Definition of Planned Property Sales. A new definition of “Planned Property Sales” is hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“Planned Property Sales” shall mean the sales of property and assets permitted by Section 6.5(a)(iv) and Section 6.5(a)(viii).

1.4 Amendment to Definition of Program Contracts. The definition of “Program Contracts” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Program Contracts” shall mean (a) all contracts for television, film and Programs, (b) all music and related audio rights with respect to television, film and Programs and (c) all syndicated television series exhibition rights and other similar television or film rights acquired under license agreements.

1.5 New Definition of Second Amendment Effective Date. A new definition of “Second Amendment Effective Date” is hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“Second Amendment Effective Date” shall mean June 27, 2003.

1.6 New Definition of Upfront Radio Broadcasting Payments. A new definition of “Upfront Radio Broadcasting Payments” is hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“Upfront Radio Broadcasting Payments” shall mean, for any period commencing on or after the Second Amendment Effective Date, the aggregate cash payments actually made by the Borrower and its Subsidiaries on a Consolidated basis during such period in connection with the acquisition of radio broadcasting rights and other similar audio rights, excluding radio broadcasting programming costs that shall be expensed in the twelve month period following the date such radio broadcasting rights or other similar audio rights are acquired.

1.7 Treatment of Planned Property Sales. The third paragraph of Section 1.3 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

For purposes of computing the financial covenants set forth in Section 5.9 for any applicable test period, any Permitted Acquisition or permitted sale of assets (including a stock sale, but excluding any Planned Property Sale for computation of the Fixed Charge Coverage Ratio and Interest Coverage Ratio) that was consummated during such period shall have been deemed to have taken place as of the first day of such applicable test period.

1.8 Additional Second Amendment Fee. A new subsection (e) is hereby added to Section 2.6 of the Credit Agreement to read as follows:

(e) Additional Second Amendment Fee. If a Planned Property Sale is not consummated by September 30, 2003, the Borrower agrees to pay to the Administrative Agent, on behalf of each of the Lenders that executed the Second Amendment to this Agreement by the deadline set forth in Section 2.1 thereof, an additional amendment fee equal to 0.10% of the sum of such Lender’s Revolving Commitment as of the Second Amendment Effective Date plus such Lender’s outstanding Term Loans as of the Second Amendment Effective Date, such fee to be due and payable on October 1, 2003.

1.9 Amendment to Leverage Ratio. Section 5.9(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

Section 5.9 Financial Covenants.

(a) Leverage Ratio. At all times, the Leverage Ratio during the following periods shall be less than or equal to the ratios corresponding to such periods:

*Period*		*Maximum Ratio*
Second Amendment Effective Date through December 30, 2003		6.15 to 1.0
December 31, 2003 through June 29, 2004		4.75 to 1.0
June 30, 2004 through September 29, 2004		4.50 to 1.0
September 30, 2004 through December 30, 2004		4.00 to 1.0
December 31, 2004 and thereafter		3.00 to 1.0

;provided, however, upon the consummation of any one Planned Property Sale, the foregoing Leverage Ratio levels shall be reduced as follows (and the following required Leverage Ratio levels shall remain in effect until the earlier to occur of (i) consummation of both Planned Property Sales and (ii) the latest Maturity Date):

*Period*		*Maximum Ratio*
Second Amendment Effective Date through June 29, 2004		4.75 to 1.0
June 30, 2004 through September 29, 2004		4.50 to 1.0
September 30, 2004 through December 30, 2004		4.00 to 1.0
December 31, 2004 and thereafter		3.00 to 1.0

;provided further, however, upon the consummation of both Planned Property Sales, the foregoing Leverage Ratio levels shall be reduced as follows:

*Period*		*Maximum Ratio*
Second Amendment Effective Date through December 30, 2003		4.00 to 1.0
December 31, 2003 through June 29, 2004		3.50 to 1.0
June 30, 2004 and thereafter		3.00 to 1.0

1.10 Amendment to Asset Sale Negative Covenant. Section 6.5(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc.

No Credit Party shall:

(a) dissolve, liquidate or wind up its affairs, sell, transfer, lease or otherwise dispose of its property or assets or agree to do so at a future time except the following, without duplication, shall be expressly permitted:

(i) Specified Sales;

(ii) the disposition of property or assets as a result of a Recovery Event to the extent the net proceeds therefrom are used to repay Loans pursuant to Section 2.8(b) or repair or replace damaged property or to purchase or otherwise acquire new assets or property, provided that such purchase or acquisition is consummated within 270 days of such receipt;

(iii) the sale, lease or transfer of property or assets from a Credit Party to another Credit Party (including the liquidation or consolidation of any Credit Party (other than the Borrower) into another Credit Party);

(iv) the sale of the Television Stations WFXG-TV in Augusta, Georgia and WXTX-TV located in Columbus, Georgia for a cash purchase price of approximately $40,000,000;

(v) the contribution of certain assets by the Television Station KIDK-TV in Idaho Falls, Idaho to a joint venture (or similar entity or arrangement) with the American Broadcasting Company, Inc. affiliate located in Idaho Falls, Idaho on terms acceptable to the Administrative Agent; provided that the Administrative Agent, on behalf of the Lenders, shall be granted a security interest in, or Lien on, the equity or contractual interests held by the Credit Parties in such joint venture (or similar entity or arrangement) on terms acceptable to the Administrative Agent;

(vi) the sale of two (2) parcels of real property in Coos Bay, Oregon following the relocation of Station KCBY to its new studio;

(vii) the sale of approximately 38 acres of real property located in Lane County, Oregon and the fixtures located thereon for a cash purchase price of approximately $110,000; and

(viii) the sale of substantially all of the assets used in operating the radio broadcast stations KWJJ-FM and KOTK(AM) in Portland, Oregon for a cash purchase price of approximately $44,000,000, including the station licenses, certain tangible assets, customary agreements used in operating the stations and the real property on which the KOTK(AM) tower is located; provided that 100% of the Net Cash Proceeds from such sale shall be applied to prepay the Loans in accordance with the terms of Section 2.8(b)(iii) and (vii) without giving effect to any reinvestment right of the Credit Parties contained in Section 2.8(b)(iii);

provided, that, (A) with respect to clauses (i) and (ii) above (other than Specified Sales consisting of trade-ins of vehicles or equipment), at least 75% of the consideration received therefor by the applicable Credit Party shall be in the form of cash or Cash Equivalents and (B) with respect to clauses (iv) and (viii) above, (1) 100% of the consideration received therefor by the applicable Credit Party shall be in the form of cash or Cash Equivalents and (2) the Borrower shall deliver to the Administrative Agent, prior to the consummation of any such sale of assets, a certificate of a Responsible Officer certifying that no Default or Event of Default will exist both before and after giving to such sale of assets; or

ARTICLE II

CONDITIONS TO EFFECTIVENESS

2.1 Closing Conditions.

This Amendment shall become effective as of the Second Amendment Effective Date upon satisfaction of the following conditions (in form and substance reasonably acceptable to the Administrative Agent):

(a) Executed Amendment. Receipt by the Administrative Agent of a copy of this Amendment duly executed by each of the Credit Parties and the Required Lenders.

(b) Resolutions. Receipt by the Administrative Agent of copies of resolutions of the Board of Directors of each of the Credit Parties approving and adopting this Amendment, the transactions contemplated herein and authorizing execution and delivery hereof, certified by a secretary or assistant secretary of such Credit Party to be true and correct and in force and effect as of the date hereof.

(c) Incumbency Certificate. Receipt by the Administrative Agent of an incumbency certificate with respect to each of the Credit Parties.

(d) Legal Opinion. Receipt by the Administrative Agent of an opinion from counsel to the Credit Parties relating to this Amendment and the transactions contemplated herein, in form and substance satisfactory to the Administrative Agent, addressed to the Administrative Agent and the Lenders and dated as of the date hereof.

(e) Fees. (i) Receipt by the Administrative Agent, on behalf of each Lender that executes this Amendment by 5:00 p.m. (EST) on June 26, 2003, of an amendment fee equal to 0.15% of the sum of such Lender’s Revolving Commitment plus such Lender’s outstanding Term Loans; and (ii) receipt by the Administrative Agent of all fees and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the fees and expenses of Moore & Van Allen PLLC.

ARTICLE III

MISCELLANEOUS

3.1 Amended Terms. The term “Credit Agreement” as used in each of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

3.2 Representations and Warranties of Credit Parties. Each of the Credit Parties represents and warrants as follows:

(a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

(b) This Amendment has been duly executed and delivered by such Person and constitutes such Person’s legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(c) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment.

(d) The representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects as of the date hereof (except for those which expressly relate to an earlier date).

3.3 Acknowledgment of Guarantors. The Guarantors acknowledge and consent to all of the terms and conditions of this Amendment and agree that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge the Guarantors’ obligations under the Credit Documents.

3.4 Credit Document. This Amendment shall constitute a Credit Document under the terms of the Credit Agreement.

3.5 Entirety. This Amendment and the other Credit Documents embody the entire agreement between the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

3.6 Counterparts; Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart to this Amendment by telecopy shall be effective as an original and shall constitute a representation that an original will be delivered.

3.7 General Release. In consideration of the Required Lenders entering into this Amendment, the Credit Parties hereby release the Administrative Agent, the Lenders, and the Administrative Agent’s and the Lenders’ respective officers, employees, representatives, agents, counsel and directors from any and all actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure to act under the Credit Agreement on or prior to the date hereof.

3.8 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

3.9 Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The jurisdiction, services of process and waiver of jury trial provisions set forth in Sections 9.14 and 9.17 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

IN WITNESS WHEREOF the Borrower, the Guarantors and the Required Lenders have caused this Amendment to be duly executed on the date first above written.

BORROWER:	FISHER BROADCASTING COMPANY a Washington corporation

	By:	/s/ DAVID D. HILLARD
		Name: David D. Hillard Title: Assistant Secretary

GUARANTORS:						FISHER RADIO REGIONAL GROUP INC., a Washington corporation

						FISHER BROADCASTING-PORTLAND RADIO, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-SEATTLE RADIO, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-PORTLAND TV, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-SEATTLE TV, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-S.E. IDAHO TV, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-IDAHO TV, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-GEORGIA, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-OREGON TV, L.L.C., a Delaware limited liability company

						FISHER BROADCASTING-WASHINGTON TV, L.L.C., a Delaware limited liability company



						By:		/s/ DAVID D. HILLARD
								Name: David D. Hillard Title: Assistant Secretary

ADMINISTRATIVE AGENT

AND LENDERS:

WACHOVIA BANK, NATIONAL ASSOCIATION

as Administrative Agent and as a Lender

By: /s/ Franklin M. Wessinger

Name: Franklin M. Wessinger

Title: Managing Director

BANK OF AMERICA, N.A

As Co-Syndication Agent and as Lender

By: /s/ Mark N. Crawford

Name: Mark N. Crawford

Title: Senior Vice President

EX-31.1 5 dex311.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER Certification of Chief Executive Officer

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, William W. Krippaehne, Jr., President and Chief Executive Officer of Fisher Communications, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fisher Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 12, 2003

/s/ William W. Krippaehne, Jr.

William W. Krippaehne, Jr.

President and Chief Executive Officer

EX-31.2 6 dex312.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER Certification of Chief Financial Officer

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, David D. Hillard, Chief Financial Officer of Fisher Communications, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fisher Communications, Inc.;

a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 12, 2003

/s/ David D. Hillard

David D. Hillard

Senior Vice President

Chief Financial Officer

EX-32.1 7 dex321.htm CERTIFICATION OF CEO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fisher Communications, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I William W. Krippaehne Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)

The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 12, 2003

/s/ William W. Krippaehne Jr.

William W. Krippaehne Jr.

President and Chief Executive Officer

EX-32.2 8 dex322.htm CERTIFICATION OF CFO PURSUANT TO SECTION 906 OF THE SARBANE-OXLEY ACT Certification of CFO pursuant to Section 906 of the Sarbane-Oxley Act

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fisher Communications, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I David D. Hillard, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(3)

The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(4)

The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 12, 2003

/s/ David D. Hillard

David D. Hillard

Senior Vice President

Chief Financial Officer

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